UK FSA chairman Lord Turner outlines agenda for regulatory reformation
Lord Turner has described key strands of regulatory reform in response to the financial crisis
LONDON - Lord Turner, chairman of the UK's Financial Services Authority (FSA), has spoken about the need for new regulatory rules and the consequences for national regulators as a result of the global financial crisis. Turner's comments at The Economist's inaugural City Lecture come ahead of his review of banking supervision and regulation, due for release in March.
The UK regulator's chairman said the 'originate to distribute' model - maligned as a cause of the current financial crisis - had a future role to play but needed reform to shed complexity and increase transparency. He said a great increase in proprietary trading over the past decade was another source of risk, adding that financial innovation had increased systemic risk for, in many cases, minimal economic gains.
He outlined three regulatory initiatives to address the root cause of the financial downturn. New approaches to capital adequacy form the first of these pillars. Counter-cyclical capital requirements are touted, together with generally much higher capital held against risky trading strategies.
The foundation of a new liquidity regime was also flagged as a key objective. Turner said this must not focus just on individual firm's liquidity but allow for a market-wide perspective.
Thirdly, Turner said financial activity must be regulated not according to its legal form but to its economic substance. This could hint about the need to create additional capital requirements above and beyond those laid out at international level by the Bank for International Settlements' Basel Committee or the European Union - neither of which are renowned for celerity in regulatory action.
Turner's March report will, he said, provide for greater clarity. The report will describe new measures already introduced by the FSA, existing proposals currently under consultation, and those where the FSA has defined objectives and will lobby for international agreement.
Click here for the full speech.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Risk management
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
Benchmark switch leaves hedging headache for Philippine banks
If interest rates are cut before new benchmark docs are ready, banks face possible NII squeeze
Op risk data: Tech glitch gives customers unlimited funds
Also: Payback for slow Paycheck Protection payouts; SEC hits out at AI washing. Data by ORX News
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies
Top 10 op risks: Change brings challenges as banks splash the cash
Higher interest margins and a trend toward insourcing drive major tech projects
Top 10 op risks: deepfakes drive rise in fraud fears
External fraud re-enters top 10 as artificial intelligence provides new tools for criminals
Should the ECB stress-test counterparty default risks?
The US Fed already does, but it is notable that EU banks were less exposed to Archegos
Most read
- Top 10 operational risks for 2024
- The American way: a stress-test substitute for Basel’s IRRBB?
- Filling gaps in market data with optimal transport