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Cyber Lexicon Includes WOCCU Recommended Changes

The Financial Stability Board (FSB) published a Cyber Lexicon intended to support the work of the FSB, standard-setting bodies, authorities and private sector participants to address financial sector cyber resilience. 

WOCCU recently supported the initiative to develop a Cyber Lexicon to address cyber security and cyber resilience in the financial sector, but made numerous suggestions, many of which were included in today’s issuance.  Of note was the WOCCU recommended approach taken by the FSB to focus the scope of the lexicon on core terms and exclude overly technical terms as well as general business and regulatory terms to avoid confusion among industries.

The lexicon as adopted can prove to be useful to support work in the following areas:

  • Cross-sector common understanding of relevant cyber security and cyber resilience terminology;
  • Work to assess and monitor financial stability risks of cyber risk scenarios;
  • Information sharing as appropriate; and
  • Work by the FSB and/or standard-setting bodies to provide guidance related to cyber security and cyber resilience, including identifying effective practices.

The lexicon will be delivered to the G20 Leaders’ Summit in Buenos Aires later this month and can be viewed here.

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Financial Stability Board

WOCCU Urges Flexibility by FSB for Legal Entity Identifier

WOCCU urged the Financial Stability Board to incentivize increased uptake of the Legal Entity Identifier rather than to mandate its usage.  This approach will limit unreasonable regulatory burdens on credit unions and other community-based financial institutions as the expense of such adoption outweighs the benefit of mandatory adoption.  WOCCU acknowledged the benefits of optional adoption that can result from the use of LEI in areas such as AML/CFT and other areas,but did not support mandatory adoption for smaller institutions.

These comments came as part of the FSB's Thematic peer review on implementation of the Leal Entity Identifier:  summary Terms of Reference.


A copy of WOCCU's letter can be viewed here.

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Financial Stability Board

WOCCU Urges Continued Credit Union Access to Central Clearing of OTC Derivatives.

WOCCU made numerous recommendations that will allow credit unions to continue to have access to central clearing of over-the-counter derivatives.  In particular WOCCU urged a reduction in Basel III’s capital requirements for issuers and clearers of interest-rate swaps and caps to help better ensure continued access to interest rate derivatives for credit unions.  Without changes to these rules, the banks’ cost of capital for issuing or clearing interest rate derivatives may result in the banks dropping credit unions and other smaller derivatives users as clients.

The comments were filed in response to the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructure (CPMI) and the International Organization of Securities Commissions’ (together “the Committees”) Consultative Document: Incentives to centreally clear over-the-counter (OTC) derivatives.

A copy of the letter can be viewed here.

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Financial Stability Board

WOCCU Urges Proportionality in FSB's Cyber Lexicon Initiative

The World Council of Credit Unions urged the Financial Stability Board (FSB) to take a proportional regulatory approach in its cybersecurity guidance so as to not impose an unreasonable compliance burden on community-based financial institutions, such as credit unions.  These comments came as part of World Council's comments on FSB's Consultative Document on Cyber Lexicon.

World Council supported FSB's initiative to develop a Cyber Lexicon and to address cyber security and cyber resilience in the financial sector as well as supporting the draft lexicon and the criteria used to develop it. 

A copy of the letter can be viewed here

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Financial Stability Board

WOCCU Urges FSB to Consider Cooperative Structure on Proposals on Resolution Regimes

The World Council of Credit Unions filed two comment letters with the Financial Stability Board (FSB) on their two Consultation Documents on Key Attributes of Effective Resolution Regimes:  1. Principles on Bail-in Execution; and 2. Funding Strategy Elements of an Implementable Resolution Plan

FSB Bail-In Principles Proposal:

On the FSB Principles on Bail-in Execution WOCCU:

  1. Urges the FSB to limit these requirements to systemically important banks only;
  2. Argues that the FSB should respect the cooperative structure and not require a change in the coop’s ownership and control even in the event of a “bail-in”;
  3. Urges the FSB allow supervisors and institutions the option to engage more than one valuation firm to value its assets;
  4. Argues the FSB should not require community-based depository institutions to invest in computer programs that provide “highly granular” information about their assets and liabilities; and
  5. Cautions that public communications by supervisors concerning troubled financial cooperatives should be carefully crafted so as not to cause a run on that institution or on other financial cooperatives, especially since credit unions and other financial cooperatives are privately held by their member-depositors (so it is not necessary to issue communications to a broader “market” as would likely be necessary for a publicly traded systemically important bank).

FSB Resolution Funding Strategies Proposal: 

WOCCU urged the FSB to apply the proposed funding strategy only to systemically important banks.  Further WOCCU discusses information sharing between institutions and supervisors and provides examples of how cooperative depository institutions systems have handled past resolutions, such as the US “corporate credit unions crisis” of 2009, without demutualizing, such as by using private stabilization funds or temporary public-sector stabilization funds.

A copy of the Bail-In Principles Comment Letter can be viewed here and the Resolution Funding Strategies Proposal Comment Letter can be viewed here.

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Financial Stability Board

Financial Stability Board Seeks Input on G-SIB Resolution Planning

The Financial Stability Board (FSB) issued for consultation two proposals for guidance on the implementation of its Key Attributes of Effective Resolution Regimes for global systemically important banks (G-SIBs), designed to address the “too-big-to-fail” institutions.

First is the consultation on Principles on Bail-in Execution referring to the write-down and/or conversion of liabilities into equity and helps implement a creditor-financed recapitalization as part of an orderly resolution that minimizes impacts on financial stability, ensures the continuity of critical functions, and avoids exposing taxpayers to loss.

The document proposes a set of principles covering:

  • disclosures on the instruments and liabilities within the scope of bail-in;

  • valuations to inform and support the application of bail-in;

  • processes to suspend or cancel the listing of securities, to notify creditors, and to deliver new securities or tradeable certificates following the entry into resolution;

  • securities law and securities exchange requirements during the bail-in;

  • processes for transferring governance and control rights and establishing a new board for the firm in resolution; and

  • market and creditor communications.

Second, the Consultation on Funding Strategy Elements of an Implementable Resolution Plan proposing guidance on the development of a plan for funding in resolution that builds on the FSB’s August 2016 Guiding Principles on the temporary funding needed to support the orderly resolution of a global systemically important bank (G-SIB) and existing supervisory and resolution guidance on liquidity risk management and resolution planning.

It identifies a set of key funding strategy elements covering:  1.  funding strategy capability; 2. a resolution funding plan by the authorities; 3. the use of firm assets and private sources of funding; 4. access to temporary public sector backstop funding mechanisms; and 5. information sharing and coordination between authorities. 

Comments are due to the FSB by February 2, 2018.

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Financial Stability Board

FSB Issues Report on Financial Sector Cybersecurity Regulations

The Financial Stability Board (FSB) issued its conclusions from a stocktake on cybersecurity regulations, guidance and supervisory practices which was delivered to the October 2017 Finance Minsters and Central Bank Governors in Washington, DC.

Notable findings of the FSB stocktake include the following:

  • All FSB member jurisdictions report drawing upon a small body of previously developed national or international guidance or standards when developing their own regulatory or supervisory schemes for the financial sector;

  • Some elements commonly covered by regulatory schemes targeted to cybersecurity include risk assessment, regulatory reporting, role of the board, third-party interconnections, system access controls, incident recovery, testing and training.

  • Jurisdictions remain active in further developing their regulation and guidance. Seventy-two per cent of jurisdictions report plans to issue new regulations, guidance or supervisory practices that address cybersecurity for the financial sector within the next year.

  • International bodies also have been active in addressing cybersecurity for the financial sector.

Private sector participants in the stocktake expressed support for principles-based, risk-based and proportional regulation, and also stressed the importance of a globally consistent approach that avoids multiple, potentially conflicting regulatory schemes.


The  summary report together with the detailed analysis can be viewed here.

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Financial Stability Board