CMF: Too many cooks
20 October 2016 Amsterdam
Image: Shutterstock
There are too many differences between regional regulations and not enough will from regulators to align them, according to speakers at the 10th Fleming Collateral Management Forum.
The US, EU and Asian markets maintain a number of regulatory inconsistencies across the main governing frameworks for the global securities lending markets, such as the Securities Financing Transaction Regulation and Basel III.
Delegates at the 10th Fleming Collateral Management Forum heard that a lack of conformity in the interpretation of the Basel Committee on Banking Supervision’s recommendations has now been compounded into final-form regulations, which makes conducting business internationally more complex.
According to one panellist representing an association, attempts to iron out differences in implementation dates and align legal readings of key terms and phrases in regulation has often been met with significant push-back by regulators that did not wish to miss deadlines.
At the same time, region-specific regulations, such as the European Markets Infrastructure Regulation (EMIR) and the US Dodd-Frank Act, which are meant to have equivalency rules in other jurisdictions, are actually riddled with subtle yet significant differences, according to a consultant panellist.
Another regulatory expert offered an an explanation of this phenomenon, stating: "It really goes back to the inception of Dodd-Frank and the 'original sin' of forming regulation for global markets in a fragmented way."
An organised effort to address regulatory fragmentation is widely expected by the industry to be the primary motive behind what will become the Basel IV initiative.
The US, EU and Asian markets maintain a number of regulatory inconsistencies across the main governing frameworks for the global securities lending markets, such as the Securities Financing Transaction Regulation and Basel III.
Delegates at the 10th Fleming Collateral Management Forum heard that a lack of conformity in the interpretation of the Basel Committee on Banking Supervision’s recommendations has now been compounded into final-form regulations, which makes conducting business internationally more complex.
According to one panellist representing an association, attempts to iron out differences in implementation dates and align legal readings of key terms and phrases in regulation has often been met with significant push-back by regulators that did not wish to miss deadlines.
At the same time, region-specific regulations, such as the European Markets Infrastructure Regulation (EMIR) and the US Dodd-Frank Act, which are meant to have equivalency rules in other jurisdictions, are actually riddled with subtle yet significant differences, according to a consultant panellist.
Another regulatory expert offered an an explanation of this phenomenon, stating: "It really goes back to the inception of Dodd-Frank and the 'original sin' of forming regulation for global markets in a fragmented way."
An organised effort to address regulatory fragmentation is widely expected by the industry to be the primary motive behind what will become the Basel IV initiative.
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