The Financial Stability Board (FSB) announced that a private sector task force has been established to develop principles aimed at improving disclosure by financial institutions.
The FSB points out that the importance of effective disclosure of risk exposures and risk management practices by financial institutions was highlighted by the financial crisis. And so, it has facilitated the creation of a group to: develop principles for enhanced disclosures, based on current market conditions and risks, including ways to enhance the comparability of disclosures; and, identify leading risk disclosure practices.
The so-called Enhanced Disclosure Task Force (EDTF) is to produce recommendations for the FSB by October. And, the FSB will consider holding another international roundtable by the end of the year to facilitate further discussion on prevailing market conditions and risks, and the progress toward improving the transparency of risks and risk management through disclosure.
The EDTF is co-chaired by Hugo Banziger, chief risk officer at Deutsche Bank; Russell Picot, group general manager and chief accounting officer at HSBC Holdings plc; and, Christian Stracke, managing director and global head of credit research group at PIMCO. In addition to the co-chairs, it includes 25 senior officials and experts representing financial institutions, investors and analysts, credit rating agencies, and external auditors, including Royal Bank’s chief risk officer, Morten Friis.
The group will have dialogue with standard-setting bodies, such as the International Organization of Securities Commissions, the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors, the International Accounting Standards Board, the US Financial Accounting Standards Board, and the International Auditing and Assurance Standards Board, as it develops its recommendations.
“The FSB supports these efforts which, together with the activities of standard setters, are expected to result in improved risk disclosure practices by financial institutions that will provide timely and useful information to investors,” said Mark Carney, chairman of the FSB, and governor of the Bank of Canada.