ISDA published a statement that outlines challenges in implementation of the new Basel III market risk standard for banks in emerging markets. The statement highlights that there are uncertainties about how the rules will be transposed and whether all jurisdictions will meet the 2022 implementation target set by BCBS.
The statement mentions that the challenges posed by the implementation of the market risk standard for banks in emerging markets include barriers to entry, shortage of data, and concerns about the treatment of sovereign debt. While it is important for the framework to be implemented as consistently as possible, it is also imperative that regulators and market participants monitor and understand the impact on emerging market banks and economies. As per the statement, most jurisdictions in Asia Pacific, including China and India, have not yet set out any plan for the transposition and implementation of the fundamental review of trading book (FRTB) standard. However, Hong Kong appears to be aiming for compliance with the 2022 timeline set by BCBS, following indications from HKMA that it will publish a consultation on the FRTB in 2019. Singapore and Australia are also expected to follow the global timeline, but there has not yet been any public information from regulators. Furthermore, EU has proposed going live with a two-step approach, starting with reporting requirements and moving subsequently to binding capital requirements, which will form part of a separate legislative proposal.
Keywords: International, Banking, Market Risk, FRTB, Capital Requirements, Basel III, Emerging Markets, BCBS, ISDA
Previous ArticleFED Updates Form and Supplemental Instructions for FR Y-9C Reporting
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.
FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.
SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.
EIOPA announced a change in the frequency of current extraordinary processes for risk-free interest rate term structures (RFR) and symmetric adjustment to equity risk (EDA) from a weekly basis to every two weeks.