The Fundamental Review of the Trading Book (FRTB) is the biggest global sell-side regulatory change in more than two decades, completely overhauling the framework for market risk. The pressure is on for hundreds of banks to decide on an FRTB solution in order to gain regulatory approval before the 2022 deadline.

Bloomberg’s Solution
A comprehensive suite of solutions enables you to meet all aspects of the FRTB requirements, ranging from calculation engines to “real price” data repositories. Whether you require FRTB-ready data, a reliable risk analytics engine, or a full end-to-end workflow, Bloomberg can customize a package to meet your needs. New capabilities include regulatory capital calculations for both standardized and internal model approaches, as well as risk factor mapping and modellable risk factor determination—all powered by Bloomberg pricing and market data.

LIBOR Transition

Inter-bank Offered Rates (IBORs), a series of benchmark interest rates, are undergoing a period of change as regulators and industry groups have recommended that firms transition away from the London Inter-bank Offered Rate (LIBOR) and prepare to replace LIBOR with overnight Risk Free Rates (RFRs). As RFRs are structurally different to IBORs, transitioning to the new rates will be a demanding and complex process. Global regulators also continue to seek consensus from market participants regarding fallback language as they transition from LIBOR to these new rates.

Bloomberg’s Solution 
Bloomberg offers a comprehensive suite of data, analytics, and portfolio solutions to help market participants assess the impact of the transition to risk free rates and provides transparency and supports adoption for all products across our industry leading platform.

The European Benchmarks Regulation (EBR) applies to administrators, contributors and users of benchmarks. The EBR establishes a common regulatory framework, seeking to ensure benchmarks are produced in a robust and reliable manner, and to minimize conflicts of interest in the benchmark-determination process. The regulation impacts indices across asset class, including fixed income, equity, interest rates, FX and commodities.

Bloomberg’s Solution
Bloomberg offers a simple and concise mechanism to identify registered and authorized administrators under ESMA, their index families and the universe of indices within each index family with relevant reference data to understand the type of index.

Unlike in Europe or the U.S., the diverse economies and jurisdictions of Asia Pacific do not adhere to a single regulatory approach. While select global regulation, such as Basel III, is being widely implemented, the regional trend is toward greater diffusion and fragmentation—and thus greater localization in APAC regulation.

To increase transparency in the Securities Financing Transactions market, the European Union introduced the Securities Financing Transactions Regulation (SFTR). The regulation comprises three pillars, two of which – concerning re-use of collateral and disclosure obligations for funds – came into force in January 2016. A third pillar that introduces a number of reporting requirements for market participants was published in draft form in March 2017. EU regulators are expected to formally adopt the rules in late 2018 or early 2019, with reporting to begin one year later.

Bloomberg’s Solution
Bloomberg provides financial institutions impacted by SFTR, whether trading in the repo or securities lending market, with a holistic suite of solutions that both integrate seamlessly and work independently. Building upon our existing data, analytics, order management, transaction and trade reporting solutions, we’ve created a comprehensive solution that covers the entire trade lifecycle and works across both e-trading and voice workflows.

In July 2014, the International Accounting Standards Board (IASB) issued IFRS 9 Financial Instruments, replacing IAS 39. The standard updates the model for balance sheet classification and measurement of financial instruments, impairment of financial securities, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.

Bloomberg’s Solution
Bloomberg’s IFRS 9 SPPI Test solution assists clients in performing the contractual cash flows test required by the updated IFRS 9 classification and measurement model. The Bloomberg solution automates the process of reviewing individual security prospectuses and legal documents by scanning over 70 unique security attributes for each financial instrument and identifying potentially non-SPPI features or cash flows.

Intesa Sanpaolo Selects Bloomberg IFRS 9 SPPI Data to Streamline Adoption of New Accounting Standard. View the press announcement.

In September 2013, the Basel Committee on Banking Supervision (BCBS), together with the Bank of International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO), created a framework establishing global requirements for margining of non-cleared over-the-counter (OTC) derivatives. The framework is designed to reduce systemic risks related to OTC derivatives markets and to provide firms with appropriate incentives for central clearing. The new minimum standards, which took effect in many jurisdictions globally—including the U.S. and Europe— from September 2016, obliged covered firms that engage in non-centrally cleared derivatives to exchange initial margin and variation margin. The regulation goes as far as defining the types of eligible collateral and their respective haircuts for margining. These requirements impact various financial institutions and require front-to-back infrastructure changes.

Bloomberg’s Solution
Bloomberg’s MARS Collateral Management is an end-to-end collateral management and processing hub that provides a straight-through, automated solution to holistically manage and monitor exposures and collateral positions. It is a multi-product, multi-asset collateral and margin management application that delivers a complete range of functionality. Additionally, our Collateral Tagging solution provides customers with an efficient mechanism to determine, classify and comply with the collateral eligibility requirements of the non-centrally cleared OTC derivatives margin rule across various global regimes.

An update to the 2007 Markets in Financial Instruments Directive, MiFID II applies to financial industry players providing investment services, such as investment banks, portfolio managers and brokers. In tandem with MiFIR, a regulation on the same issue, the new directive seeks to increase market stability and confidence, and bolster consumer protections.

Bloomberg’s Solution
Bloomberg is continuously working with regulators and market participants to determine the impact of MiFID II and MiFIR on the execution of derivatives trades. Bloomberg provides entity and customer classifications data as part of its Reference Data Services as well as independent, third-party valuation of derivatives instruments through BVAL Derivatives. Execution platforms that fully comply with the MIFID II/MiFIR requirements are under development. The Bloomberg transaction reporting service is available as part of the Bloomberg’s Trade Order Management Solutions (TOMS), our sell-side trading solution for fixed income and derivative transactions.