IRSG response to European Commission consultation on a possible recovery and resolution framework for financial institutions other than banks

Published 21/12/2012

In its response to the European Commission's consulation on a possible recovery and resolution framework for financial institutions other than banks, the IRSG is supportive of EU action in this area but considers that EU legislation mut be fully aligned with IOSCO principles on this area.

The group highlighted a number of issues including:

  • A preference for a resolution framework to be set at the global level under the relevant CPSS-IOSCO standards;
  • The need for a different framework for CCPs and CSDs as they are very different types of entities with different risk profiles;
  • The recovery and resolution framework should be applicable to all CCPs and CSDs but as regards other FMIs this should only be applicable to the extent that they are systemically important;
  • Continuity of critical services should be the general objective for the resolution of CCPs and CSDs, after which legal certainty, predictability and preservation of financial stability should be prioritised;
  • Leadership of resolution action by the home state resolution authority should be combined with pre-agreed conflict management with other member state resolution authorities.

You may also be interested in the following related reports:

IRSG response to Swinburne report on non-bank resolution

IRSG response to HMT consultation “Financial sector resolution: broadening the regime”