The chairman of the U.K.’s Financial Services Authority has set out three long-term regulatory initiatives that the FSA will pursue to reduce the risk of future financial crises.

The first initiative is a new approach to capital adequacy, requiring more capital held against risky trading strategies. This would also mean building up adequate buffers during good economic times, which can be drawn on in bad times, says FSA chairman Lord Adair Turner.

The second is a new liquidity regime focused not just on individual firms’ liquidity but also on market-wide risk. The third initiative is to ensure that financial activity is regulated according to its economic substance, not its legal form.

Turner also outlined the issues that he would deal with in his review of the regulation and supervision of the banking system, to be published in March. He said he believed the “originate and distribute” model of financing lending had a role to play in the future, but needed to be reformed, with less complexity and opacity. He also said that over the last decade the scale of proprietary trading had created risks, and that financial innovation had in many cases delivered minimal economic value and had increased the dangers of financial instability.