IRSG response to HMT consultation “Financial Sector Resolution: Broadening the Regime”

Published 15/11/2012

This IRSG response to HM Treasury’s consultation on a possible recovery and resolution framework for financial institutions other than banks welcomes the UK taking a lead on these issues but cautions against the UK developing a unilateral solution in advance of European regulation in this area. The aim of any legislation in this area should be continuity of service and the preservation of financial stability.

The group highlighted a number of issues including:

  • The whole of a resolution regime should only apply to systemic institutions, with a distinction between utilitarian and for profit CCPs;
  • Non-discriminatory access provisions are important from both a competition and systemic risk mitigation perspective;
  • As very few CCPs in the UK serve solely the domestic market, it will be important to consider the issue of resolution from a cross-border context;
  • Given the international character of CCPs operating in the UK, there could be significant difficulties in imposing losses on members or owners of a CCP operating cross-border;
  • Ensuring continuity of access should be emphasised when drawing up the objectives for a resolution regime for non-CCP FMIs.

You may also be interested in the following related responses:

IRSG response to Swinburne report on non-bank resolution

IRSG Response to European Commission Consultation on a Possible Recovery and Resolution Framework for Financial Institutions Other Than Banks