ISDA Comment Letter to JFSA on the Draft of JFSA’s Supervisory Approaches

The International Swaps and Derivatives Association, Inc. (ISDA) welcomes the opportunity to make comments to the Financial Services Agency (the “JFSA”) on the draft of the “JFSA’s supervisory approaches – Replacing checklists with engagement -” (the “Policy”). 

ISDA strongly supports the Policy aimed at the balance between: (i) financial stability and effective intermediation and (ii) market integrity and vigor, as the basic goals of financial regulation. Similarly, in the United States, a series of reports titled “A Financial System That Creates Economic Opportunities” have been issued to the President by the United States Department of the Treasury since last June, which aim at the financial regulatory reform in the balanced views. Under the international direction going toward the development of balanced financial regulatory systems, ISDA recognizes that the Policy goes on the leading edge of such international direction and set the good precedents of an appropriate regulatory system to the other countries. ISDA would be grateful for the chance to work with the JFSA in a more multifaceted manner as an international industrial organization for sound and effective market revitalization in light of factors such as “industry initiatives” and “domestic policy formation and the global regulatory reforms” presented in the Policy. 

While ISDA endorses the JFSA’s innovative Policy as mentioned above, we have the comments on a few specific points, for your attention and consideration.

(Submitted on February 14)

Maintaining Focus on Basel III Endgame Recalibration

In its original form, the US Basel III endgame proposal would have resulted in disproportionate increases in capital for trading book activities, forcing banks to make difficult choices about their participation in certain businesses. After two-and-a-half years, a revised proposal...

IRRBB Management in EMDEs

Interest rate risk in the banking book (IRRBB) has become a growing priority for banks and regulators in emerging market and developing economies (EMDEs). As many of these countries face monetary tightening cycles and ongoing macroeconomic volatility, bank balance sheets...

Response to CPMI-IOSCO on Consultation

On February 5, ISDA and FIA responded to the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO) consultation on the management of general business risks and general business losses by financial market infrastructures (FMIs)....