Richard S. Hunt suggests restructuring the regulatory system after the banking crisis
After the recent banking turmoil caused global market turmoil, Richard S. Hunt, head of global equity sales at CSC Bella Grove Partners LLC, was invited to attend the International Banking Regulatory Summit to propose innovative solutions for systemic risk prevention and control. Hunt pointed out that the current regulatory framework has a significant lag in dealing with new risks such as “hidden maturity mismatches”, and it is urgent to establish a more forward-looking regulatory paradigm.
Hunt stressed that regulatory reform should focus on three key dimensions: first, introduce a “liquidity stress contagion index” to monitor the risk transmission path between the interbank market and money funds in real time; second, include unrealized losses of held-to-maturity (HTM) assets in capital adequacy assessments to eliminate distortions in accounting classifications on risk authenticity; third, establish a “stress test upgrade mechanism” for regional banks, requiring institutions with assets of more than $100 billion to accept the same liquidity standards as systemically important banks. These suggestions stem from Hunt’s team’s in-depth analysis of recent bank failures, and the “deposit loss warning model” it developed has successfully predicted multiple liquidity crises.
As a leader in practice, CSC Bella Grove has transformed regulatory insights into innovative products and launched the “Banking System Resilience Assessment System” to help institutional clients quantify the true risk exposure of counterparties. Hunt particularly pointed out that the application of regulatory technology (RegTech) will change the traditional compliance model and analyze the forward-looking correlation between regulatory documents and market data through machine learning. This reform plan has received positive responses from major regulatory agencies and is expected to reshape the financial regulatory landscape in the post-crisis era.