1 See speech by J.H. Powell, The Evolving Structure of the U.S. Treasury Market: Second Annual Conference of the Federal Reserve Bank of New York, October 24, 2016, 58 INTERNATIONAL MONETARY FUND

UNITED STATES significant progress has occurred and where new markets that reference the Secured Overnight Financing Rate (SOFR) are developing fast. Less progress is evident in the smaller but still material corporate securities and loan markets accessed by a wide variety of users where some more significant changes in the structure of instruments are required. Market participants need to continue work on transition as quickly as possible. The authorities should remain focused on ensuring regulated firms manage and disclose LIBOR-related risks effectively, and increasingly set harder targets with deadlines for when firms start transitioning from doing business based on LIBOR to SOFR or other reference rate-based products.

FINANCIAL SECTOR OVERSIGHT 59. The supervisory and regulatory framework is sound overall, but remaining gaps relative to international standards need to be addressed. The U.S. framework was found to have a high degree of compliance with international standards in the 2015 FSAP, however, a number of the recommendations remain outstanding (Appendix VII).43 In addition to full adherence to international standards, the FSAP considers that additional strengthening in some areas may be warranted given the system structure and evolution of new risks. A. What Are the Regulatory Challenges in a Changing Financial System?

60. The U.S. regulatory and supervisory architecture is complex, putting a premium on coordination and cooperation across agencies (Figure 27). In banking, the Federal Financial Institutions Examination Council (FFIEC) provides an effective coordinating mechanism with joint issuance of Notices of Proposed Rulemaking by banking agencies enhancing consistency in approach and messaging. Across the securities and derivatives markets, there is no formal coordination mechanism between the CFTC and the SEC, although Memoranda of Understanding (MOUs) are in place for data sharing and there is frequent informal coordination. The FSOC provides an effective mechanism for coordination across all financial sector agencies.