To date, though, we do not yet observe trading in these instruments in the secondary market. 15 Importantly, we have succeeded in increasing the stock of outstanding reserve-absorbing operations without depressing interbank activity. As Slide 14 shows, trading volume in the interbank money market even increased temporarily following the rate hike. It has remained solid since then, ensuring a robust calculation basis for SARON. The stock of outstanding repo transactions in the overnight segment is currently close to 10 billion Swiss francs, which is near the year-to-date average in this market segment. The pass-through of our September rate hike has also progressed well in other money market segments. For instance, as we show in Slide 15, overnight rates in the unsecured money market also shifted up significantly during the first business day on which the positive policy rate went into effect. We have also seen a good pass-through to SARON-based swap rates, as the 1-week rate, the green line on the slide, illustrates. Naturally, as swap rates incorporate  15  Some banks, however, do seem to be interested in secondary market trading, as they have begun placing quotes for SNB Bills. Page 8/10  expectations of future overnight interest rates, the 1-week swap rate had already increased before the monetary policy assessment in September. On the slide, we also show the 1-week implied rate from USDCHF FX swaps. This rate is generally somewhat lower than the other Swiss franc money market rates.
This has resulted in the intensification of our supervision on areas or businesses that are more prone to ML/TF risks, or where controls have been found to be lacking from past inspections. 17. We have organised and will organise more industry engagements to share supervisory findings on common lapses and good practices at the end of each series of inspections. This is intended to help level up controls over time. 2/5  BIS central bankers' speeches  18. Our inspections go beyond rules-based compliance. We focus on whether financial institutions demonstrate a good understanding of risks, and a good risk culture within the organisations. We much prefer that FIs adopt a proactive approach in meeting their regulatory obligations than a passive rule-based attitude. Let me elaborate on this. 19. One area relates to governance. You are all familiar with the common thinking of having three lines of defence. Recently, there are suggestions to augment this with a “four lines of defence” model for better governance in financial institutions. The first line involves frontline and management controls within business units; then compliance and risk management functions as the second line; and the audit function as the third line. A newer fourth line involves interactions of the FI with its external auditors and regulators. An FI’s senior management and board should monitor and be satisfied that these lines are effective. Senior managers should never “look the other way” on suspicious transactions, even if they involve major clients who are significant revenue sources.