FSB全球金融稳定委员会-FSB-Report-on-Market-Fragmentation_54页_890kb

FSB Report on Market Fragmentation Summary

Core Content

The Financial Stability Board (FSB) report on market fragmentation explores how regulatory and supervisory practices can lead to the segmentation of financial markets across jurisdictions, and how this fragmentation may impact financial stability and market efficiency. It is based on the G20's long-standing commitment to an integrated global financial system and the 2019 Japanese G20 Presidency's call for the FSB to examine market fragmentation.

The report does not aim to re-open international standards, alter institutional responsibilities, or add unnecessary administrative burdens. Instead, it outlines potential mechanisms and approaches to enhance international cooperation and mitigate the negative effects of market fragmentation.

Main Points

1. Definition and Drivers of Market Fragmentation

• No universally accepted definition exists, but the report focuses on geographic fragmentation.
• Market fragmentation can result from:
  • Differences in national regulations and supervisory practices.
  • Timing and substance of international standard implementation.
  • Extraterritorial effects of national policies.
  • Investor preferences and market structures.
  • Domestic policies such as taxation, competition, and capital controls.

2. Impact on Financial Stability and Market Efficiency

• Positive impacts: In some cases, fragmentation can act as a firewall, reducing the transmission of economic shocks and increasing domestic financial system resilience.
• Negative impacts: Fragmentation can limit cross-border diversification, impair liquidity, and increase the costs of financial services and intermediation, potentially undermining global financial stability.

3. Key Areas of Fragmentation

The report examines three key areas where market fragmentation may arise:

3.1 Trading and Clearing of OTC Derivatives Across Borders

• Fragmentation occurs due to:
  • Divergent implementation of international standards (e.g., central clearing, margining, and reporting).
  • Extraterritorial regulations requiring transactions outside a jurisdiction to comply with local rules.
• Deference processes between regulators can help mitigate these effects, though challenges remain in aligning outcomes.

3.2 Banks' Cross-Border Management of Capital and Liquidity

• Fragmentation arises from:
  • Additional regulations beyond international standards (e.g., ring-fencing).
  • Divergent implementation of international standards, leading to inconsistent capital and liquidity requirements.
• These practices may hinder the ability of banks to manage cross-border risks effectively and reduce the availability of capital during stress.

3.3 Sharing of Information Across Borders

• Fragmentation is caused by:
  • Differences in trade reporting requirements.
  • Legal barriers to full data sharing.
  • Variations in cyber risk and stress testing reporting.
• Enhanced cross-border communication and data alignment are needed to improve transparency and coordination.

Key Information

• The FSB and SSBs have established monitoring and evaluation frameworks for post-crisis reforms.
• The report includes:
  • A literature review.
  • A stocktake of SSBs' work.
  • Two case studies (trade reporting and ring-fencing).
  • Feedback from a workshop with private sector stakeholders.
• The FSB will review progress on addressing market fragmentation in November 2019.

Mechanisms and Approaches

To reduce harmful market fragmentation, the report suggests:

• Systematic review of potential fragmentary effects of regulations during development and implementation.
• Enhanced cross-border communication and information sharing via existing forums like supervisory colleges and crisis management groups (CMGs).
• Alignment of data collection and reporting requirements.
• Improving comparability of regulatory regimes and streamlining deference and recognition processes.

Next Steps and Further Work

The report outlines several areas for further FSB work to address market fragmentation:

• Enhancing clarity and consistency in deference and recognition processes for derivatives markets.
• Strengthening understanding of how supervisory and resolution authorities handle cross-border capital and liquidity management.
• Improving supervisory communication and information sharing to avoid future fragmentation.
• Evaluating whether there is evidence of market fragmentation with observable consequences for financial stability.

Conclusion

Market fragmentation is a complex phenomenon with both potential benefits and risks. The FSB report emphasizes the importance of international cooperation and coordination in regulatory and supervisory practices to ensure the resilience and efficiency of global financial markets. It highlights the need for a balanced approach that considers the trade-offs between domestic regulatory needs and the benefits of cross-border integration.