(Reuters) – The G20 leaders adopted a broad framework on Thursday for regulatory reform and repairing the financial system shaken by the worst market crisis in 80 years.

Most of the measures were first aired by the G20 meeting in Washington last November but have been fleshed out.

The Financial Stability Forum separately published detailed principles and recommendations on remuneration, managing cross-border crises and toughening up bank capital rules.

FINANCIAL STABILITY BOARD

Endorsed widening membership to include all G20 countries, the European Commission and Spain, and given a more formal and broader role in the global pantheon of oversight bodies. Financial Stability Forum is renamed the Financial Stability Board (FSB), given wider mandate to promote financial stability, set financial guidelines and monitor colleges of supervisors for big cross-border institutions.

It will also work more closely with the International Monetary Fund to conduct early warning exercises at their spring 2009 meetings, report on build up of any risks in financial markets and actions needed.

FSB member countries agree to regular peer reviews on their commitments to financial stability.

Status: 28 colleges set up to review major financial institutions with cross-border operations that could pose the greatest threat to the financial system. Remaining colleges planned by June 2009.

SYSTEMIC RISK

All systemically important financial institutions, markets and instruments should be subject to an appropriate degree of regulation and oversight.

FSB to produce report by autumn 2009 on new tools to spot and tackle system wide macro-prudential risk.

Large and complex financial institutions require particularly careful oversight given their systemic role.

Status: The EU aims to adopt a new bloc-wide systemic risk council chaired by the European Central Bank to be put in place during 2010. The United States also mulling a new authority to monitor systemic risk.

BANKS

There should be no changes to minimum bank capital requirements until economic recovery is assured.

Capital buffers above the minimum requirements should be allowed to be run down but once recovery takes place, buffers above the regulatory minimum should be increased.

New guidelines on for harmonizing the definition of what can be accepted as bank capital by the end of 2009.

G20 endorsed recommendations made by the FSB that the Basel Committee on Banking Supervision will pursue.

HEDGE FUNDS

Hedge funds or their managers will be registered and required to disclose information needed to assess risks they pose to the financial system. Registration should be based on a minimum size.

FSB to develop mechanisms for cooperation and information sharing between authorities to ensure effective oversight where a fund is located in a different jurisdiction to its manager. FSB to develop principles by end 2009 to implement changes.

Status: Global securities standards setter IOSCO has published principles for regulating hedge funds. The EU is due to come out with a draft law on April 21 for registration and supervision of hedge funds and private equity.

The U.S. Treasury is proposing that all advisers to hedge funds above a certain size must register and be subject to disclosure and reporting requirements.

CREDIT RATING AGENCIES

G20 agreed credit rating agencies should be subject to a regulatory oversight regime that includes registration, with the new regime established by the end of 2009.

Agencies should differentiate ratings for structured products and provide full disclosure of their ratings track record and the information and assumptions that underpin their ratings process.

The Basel Committee to look at whether the role of ratings in determining bank capital requirements contains adverse incentives that need addressing.

Status: The EU is in final stages of adopting a law that makes registration of credit rating agencies and their direct supervision compulsory.

ACCOUNTING

G20 agreed that accounting standard setters should by the end of 2009:

* reduce the complexity of accounting standards for financial instruments and strengthen accounting recognition of loan-loss provisions

* improve accounting standards for provisioning, off balance sheet exposures and valuation uncertainty, and make progress toward a single set of high quality global accounting standards

* improve involvement of stakeholders in the accounting standard setting process.

Status: U.S. accounting standard setter FASB and international counterpart IASB pledged to work quickly to replace accounting standards for off-balance sheet and financial instruments accounting in a matter of months. FASB and IASB have relaxed some parts of fair value or mark-to-market rules. FASB took further steps on Thursday.

EXECUTIVE PAY

G20 endorsed principles drawn up by FSB on pay and compensation in major financial institutions.

Status: The EU will come forward with principles on executive remuneration on April 21. U.S. Treasury wants regulators to issue standards for executive compensation across all financial firms.

CREDIT DERIVATIVES

The G20 agreed to promote the standardization and resilience of credit derivatives markets, in particular through the establishment of central clearing counterparties subject to effective regulation and supervision.

Industry called on to develop an action plan on standardization by autumn 2009.

Status: Dealers of OTC traded credit default swaps agree to centrally clear European transactions by end July. Central clearing has begun in United States. Industry has agreed to incorporate cash auctions into standard documentation for settling credit default swap contracts.

U.S. wants full oversight, protections and disclosure for OTC, central clearing for standardized parts of the market and to encourage further use of exchange-traded instruments.

(Reporting by Huw Jones, editing by…..)

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