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01/01/2017

FSB reports on rehypothecation of client assets and collateral reuse

On 25 January 2017, the Financial Stability Board (FSB) has published two reports which form part of the its work to transform shadow banking into resilient market-based finance.

On 25 January 2017, the Financial Stability Board (FSB) has published two reports which form part of the its work to transform shadow banking into resilient market-based finance. They are:

  • Re-hypothecation and collateral re- use: potential financial issues and regulatory approaches. In this report, the FSB describes potential financial stability issues and explains the evolution of market practices and current regulatory approaches to the re-hypothecation of client assets and collateral re-use. It also examines the possible harmonisation of regulatory approaches to the re-hypothecation of client assets and any residual financial stability risks associated with collateral re-use.
  • Non-cash collateral re-use: measure and metrics . In this report, the FSB sets out the finalized measure and metrics of non-cash collateral re-use in securities financing transactions (SFTs), which authorities will monitor for financial stability purposes.