The Financial Stability Board said it plans to focus on five areas where more detailed work is warranted to help gauge the case for further regulatory action.
In terms of securitization, it will examine the regulation of securitization, specifically regarding retention requirements and transparency.
The five areas include the regulation of banks’ interactions with shadow banking entities (indirect regulation) specifically examining consolidation rules for prudential purposes.
It also includes setting limits on the size and nature of a bank’s exposures to shadow banking entities; risk-based capital requirements for banks’ exposures to shadow banking entities; and treatment of implicit support; and the regulatory reform of money market funds (MMFs).
The FSB will look at the regulation of other shadow banking entities. It will also examine the regulation of activities related to securities lending/repos, including possible measures on margins and haircuts.
The FSB has a mandate from the Group of 20 leading industrialized and emerging economies to draft recommendations on reforming the financial sector worldwide to avoid a recurrence of the 2008 financial crisis.
The FSB said it intends to propose policy recommendations on most of the above by July 2012. The sole exception was securities lending and repos, where recommendations will be drafted by the end of next year.