The International Securities Lending Association has welcomed the European Banking Authority鈥檚 (EBA) suggestion to withhold the introduction at the EU level of minimum haircut floors for Securities Financing Transactions (SFTs), including securities lending, from the bank capital requirements framework.
According to the EBA, more data is needed to assess the impact of introducing minimum haircut floors in the EU.
In addition, the EBA has argued that such a thorough data analysis might only be performed once the Securities Financing Transactions Regulation鈥檚 reporting regime is fully implemented.
The EBA also believes that minimum haircut floors for SFTs should be introduced through markets legislation rather thank banking legislation.
This policy idea was first put forward by the Financial Stability Board in 2015, and was included in the December 2017 agreement on a new set of Basel Committee bank capital rules.
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