Banks May Win Structured Note Leeway in FSB’s TLAC Rules
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The Financial Stability Board, the global regulator led by Mark Carney, is considering adapting its proposed too-big-to-fail bank fix in response to industry concerns to make some structured notes eligible to absorb losses.
A June 4 FSB working paper obtained by Bloomberg states that an “option under exploration” is to admit structured notes, excluded in the original proposal on total loss-absorbing capacity, “to the extent that the repayment of the principal at maturity is unconditional and not contingent on any derivative-linked feature.”