As deadline looms, US agencies are stumped over replacing ratings in regulation. New market risk rules less conservative than Basel version By Melvyn Westlake

With surprising haste, Basel Committee regulators have agreed to an untried macroprudential capital instrument. Many doubt it can work

Bankers vow to fight on as attention switches to application of new rules in Europe. Unlevel playing field accepted by regulators By Melvyn Westlake

Problems with new liquidity rules recognised by regulators. But compliance costs will be high. Real grievances remain

Far-reaching bank resolution proposals will give regulators powers to seize failing firms and force bondholders to take losses

A selection of news items generated by the American regulatory reform agenda

WASHINGTON – The US Shadow Financial Regulatory Committee (SFRC), a group of respected academics specialising in regulatory matters, have strongly backed plans for banks to raise contingent capital (CoCos) as a means of strengthening their defences if they run in to trouble. “A properly structured CoCo requirement could have important incentive benefits that would nicely complement the new higher minimum capital requirements [for banks],” the Committee said in a statement following a two-day meeting in mid-December.

Heads of the three new European Supervisory Authorities (ESAs), formally established at the start of the year, were announced in mid-January. Andrea Enria has been selected chairman of the London-based European Banking Authority (EBA); Steven Maijoor as chairman of the European Securities and Markets Authority (ESMA) in Paris; and Gabriel Bernardino as chairman of the European Insurance and Occupational Pensions Authority in Frankfurt (EIOPA).

LONDON – Increased internationalisation of financial regulation risks amplifying future global booms and busts, according to a briefing note published by two London-based research institutes. Global regulations, they say, “lead to global crises as organisations are encouraged to hold similar assets and respond in similar ways when things go wrong. As a result, the new regulation could increase the systemic risk to the world economy.”

BASEL – A consultation on the level of capital that banks should hold against their exposures to central counterparties (CCPs), which will, under regulators’ plans, clear an increasing volume of derivative transactions, was announced by the Basel Committee in late December.* Banks are being strongly incentivised to clear their over-the-counter (OTC) derivative contracts through CCPs in an effort to reduce risks in this vast market. Reforms are being undertaken on both sides of the Atlantic with the aim of reducing counterparty and operational risks.