FSB: reissue of Key Attributes of Effective Resolution Regimes for Financial Institutions

The Key Attributes of Effective Resolution Regimes for Financial Institutions (the ‘Key Attributes‘ KA) set out the core elements that the FSB considers to be necessary for an effective resolution regime. Their implementation should allow authorities to resolve financial institutions in an orderly manner without taxpayer exposure to loss from solvency support, while maintaining continuity of their vital economic functions.

The FSB adopted the ‘Key Attributes‘ at its Plenary meeting in October 2011. The G20 Heads of States and Government subsequently endorsed the ‘Key Attributes‘ at the Cannes Summit in November 2011 as “a new international standards for resolution regimes”.

The Key Attributes set out twelve essential features that should be part of the resolution regimes of all jurisdictions. They relate to:

1. Scope
2. Resolution authority
3. Resolution powers
4. Set-off, netting, collateralisation, segregation of client assets
5. Safeguards
6. Funding of firms in resolution
7. Legal framework conditions for cross-border cooperation
8. Crisis Management Groups (CMGs)
9. Institution-specific cross-border cooperation agreements
10. Resolvability assessments
11. Recovery and resolution planning
12. Access to information and information sharing.

The 2014 version of the Key Attributes document

When the FSB adopted the Key Attributes in 2011 it was agreed to develop further guidance on the implementation of the Key Attributes, taking into account the need for implementation to accommodate different national legal systems and market environments and sector-specific considerations (e.g., insurance, financial market infrastructures) to promote effective and consistent implementation across jurisdictions.

On 15 October 2014, the FSB adopted additional guidance that elaborates on specific KAs relating to information sharing for resolution purposes and sector-specific guidance that sets out how the Key Attributes should applied for insurers, financial market infrastructures (FMIs) and the protection of client assets in resolution.

The newly adopted guidance documents have been incorporated as annexes into the 2014 version of the Key Attributes document. No changes were made to the text of the twelve Key Attributes of October 2011. The twelve Key Attributes remain the umbrella standard for resolution regimes covering financial institutions of all types that could be systemic in failure.

The FSB will continue its work to develop further guidance as needed to promote the effective and consistent implementation of theKey Attributes.

The Annexes to the Key Attributes

The Annexes to the Key Attributes provide guidance on implementing and interpreting the Key Attributes. They do not form part of the Key Attributes standard. Where components of the Annexes have been deemed important for purposes of assessing compliance with the Key Attributes, those components are explicitly reflected in the Key Attributes Assessment Methodology. The Annexes to the Key Attributes fall into two categories:

General guidance on the implementation of the Key Attributes (Appendix I):

I-Annex 1: Information sharing for Resolution Purposes (KAs 7 and 12)

I-Annex 2: Institution-specific Cross-border Cooperation Agreements (KA 9)

I-Annex 3: Resolvability Assessments (KA 10)

I-Annex 4: Recovery and Resolution Plans (KA 11)

I-Annex 5: Temporary Stays on Early Termination Rights (KA 4)

Sector-specific Guidance (Appendix II)

II-Annex 1: Resolution of FMIs and FMI Participants

II-Annex 1: Resolution of Insurers

II-Annex 1: Protection of Client Assets in Resolution

The sector-specific guidance recognises that not all Key Attributes are equally relevant for all sectors and that some require further explanation and interpretation, or some adaptation in order to be effectively implemented in a certain sector. The sector-specific guidance sets out how the Key Attributes should understood in a sector-specific context. It complements the Key Attributes, and the sector-specific guidance on individual KAs should be considered in conjunction with the KA to which it relates. There should be no inference that a particular KA or element of a KA does not apply simply because there is no supporting provision in the relevant Annex.