On November 5, 2013, the Financial Stability Board (FSB) launched the second stage of its two-stage quantitative impact study on the proposed regulatory framework for securities financing transactions. As you may recall, on August 29, 2013, the FSB published the results of the first stage of its look into securities finance. The report, Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos, sets out policy recommendations for addressing financial stability risks in relation to securities lending and repos. These measures formed part of an overall set of policy recommendations to strengthen oversight and regulation of shadow banking, an overview of which was published on the same date.
The second prong of the FSB's look into securities finance will be a more comprehensive quantitative assessment of the effect of the FSB's earlier haircut proposals on a broader set of firms. The study will look into both the effects of the proposed minimum standards for methodologies used by firms in calculating their own haircuts and the numerical haircut floors to be applied to certain securities financing transactions.