Review of the Differentiated Nature and Scope of Financial Regulation - Key Issues and Recommendations

January 2010

This report analyses key issues arising from the differentiated nature of financial regulation in the international banking, insurance, and securities sectors. It also addresses gaps arising from the scope of financial regulation as it relates to different financial activities, with a particular focus on certain unregulated or lightly regulated entities or activities. The Joint Forum prepared this report at the request of the G-20 to help identify potential areas where systemic risks may not be fully captured in the current regulatory framework and to make recommendations on needed improvements to strengthen regulation of the financial system.

The Joint Forum presents its findings and recommendations in five key issue areas:

  • Issues arising from regulatory differences across the three sectors, including with respect to similar financial products;
  • Supervision and regulation of financial groups, focusing on unregulated entities within those groups;
  • Residential mortgage origination, focusing on minimum underwriting standards consistently implemented by different types of mortgage providers;
  • Hedge funds, especially those that present systemic risk; and
  • Credit risk transfer, focusing on credit default swaps and financial guarantee insurance.