FSB creates 'Enhanced Disclosure Task Force'
May 14, 2012
The Financial Stability Board (FSB) has announced the formation of a private sector 'Enhanced Disclosure Task Force' (EDTF) to develop principles for enhanced disclosures by financial institutions, based on current market conditions and risks, including ways to enhance the comparability of disclosures.
The FSB was established through the G7 and G20 to coordinate at the international level the work of national financial authorities and international standard setting bodies (including the IASB) and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies.
The creation of the EDTF follows on from an FSB hosted roundtable on risk disclosures by financial institutions held in December 2011. The FSB issued a summary of the outcomes from the roundtable in a March 2012 press release (link to FSB website), which also noted the intention to form a task force.
In addition to developing principles for enhanced disclosure, the task force is also to identify leading practice risk disclosures presented in annual reports for end-year 2011 based on broad risk areas.
Click for FSB press release (link to FSB website). A summary of the key messages from the December 2011 roundtable is presented below for the convenience of our readers.
|Key messages from the December 2011 FSB rountable|
Risk disclosure foundations. Participants generally preferred risk disclosure requirements in accounting standards and securities regulatory requirements that are principles-based rather than rules-based, but investors also called for measures to improve comparability, such as more consistent risk disclosure formats or templates.
Improvements needed in financial institution risk disclosures. Investors and analysts stressed that disclosure that enhances the transparency of risks and risk management practices helps to build confidence in the firm’s management, which can be particularly important to attract debt and equity investors. Given the current financial market environment, participants expressed the view that enhanced qualitative and quantitative disclosure is particularly important in the following areas: