For example, that between the G-SIB, share registrar and the relevant Central Securities Depositories (CSDs) or International CSDs, as resolution authorities we have worked out the plumbing to find a way to distribute the shares already in issue (or new equity) to the bondholders that will take ownership of the firm via the bail-in. Most of this is a matter of building on existing technology and market conventions that are used in liability management exercises and sovereign or other debt restructurings. A difference perhaps is that as regulators we need to ensure shareholder control thresholds are observed and that we are comfortable with any resulting change in control. Equally important is the question of how and when we will carry out valuations for the purpose of the bail-in and how we will comply with listing and disclosure requirements through the process. In the event of a G-SIB failure we are unlikely to be in a position to fix bail-in amounts at the resolution weekend. Rather, come Monday morning, we will announce, first the universe of debt that has been immobilised (and thus the solvency we can put back into the balance sheet of the bank in resolution); and second the independent valuation process that will ensue. Valuation and setting the terms of the bail-in might take several months.
Whether for market counterparties, central banks or backstop providers, lending decisions are much easier to contemplate where solvency is assured in the operating entities that need funding. Work in FSB to date has concentrated on what is necessary to stabilise G-SIBs at the point of entry to resolution, whether changes to firms to make them resolvable - like TLAC and operational continuity requirements - or to market contracts and conventions - like the ISDA Protocol or access to FMIs. But bail-in is not the end of the task. It is a prelude to whatever reorganisation is necessary to restore a firm to viability or to wind it down. Importantly though bail-in buys the time for that process to be orderly. Post bail-in restructuring runs as a thread through some of the other initiatives I have mentioned. It is part of the operational continuity principles. And, as part of the access to FMI work we are keen to investigate how easy it would be in resolution to dismantle the quasiFMI functions – payment services, clearing and custody – provided by G-SIBs to clients, financial and non-financial. However easy or difficult it is to transfer or wind-down services provided by a G-SIB, clients may have contingency providers themselves or may want to rely on the portability of their positions to move. If they are to move we need to find a way for that to happen in an orderly way. Post bail-in restructuring is also where ring-fencing of UK banks fits in.