BCB amended the resolution that establishes technical requirements and operational procedures for the implementation of open banking in Brazil, with the amended resolution entering into force on its publication date. BCB also proposed rules for the disclosure of information on social, environmental, and climate risks by institutions in the National Financial System (SFN), with the comment period ending on June 05, 2021. The consultation proposes for this new disclosure regulation to be in force on January 01, 2022. This proposal is one of the deliverables agreed under the Sustainability Dimension of the BCB institutional agenda and it will be implemented in two phases.
In the first phase, with respect to the qualitative aspects, the focus is on the disclosure of clear, consistent, and comparable information about governance, strategy, and management of social, environmental, and climate risks. The second phase, which is scheduled to be launched in 2022, will set the mandatory disclosure requirements for quantitative information (metrics and targets). However, institutions that already employ indicators for the social, environmental, and climate risk management have the option to disclose quantitative information in the first phase. The proposal reinforces the integration of social risk, environmental risk, and climate-related risk in the management of traditional financial risks, establishing specific rules for the identification, measurement, evaluation, monitoring, reporting, control, and mitigation of the adverse effects arising from interactions among all risks. Such rules include mechanisms for the treatment of social risk, environmental risk, and climate-related risk as material sources of credit risk, market risk, interest rate risk in the banking book, operational risk (including legal risk), and liquidity risk.
Building on the experience of the Pillar 3 standards in the Basel framework, information is required to be disclosed in a standardized “GRSAC Report,” consisting of templates that focus on each of the core elements in recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD): governance, strategy, risk management, and metrics and targets. The disclosures are in line with the size and risk profile of an institution and the new regulation will apply to institutions allocated to Segment 1 (S1), Segment 2 (S2), Segment 3 (S3), and Segment 4 (S4), as defined in Resolution CMN 4.5531, of January 30, 2017. The disclosure proposal is inspired by the TCFD recommendations of the but is not limited to a climate perspective. The proposal complements the ongoing consultation (No. 85/2021) on rules for the management of social, environmental, and climate risks by financial institutions. Disclosure of information for the social, environmental, and climate aspects by financial institutions is crucial for improving transparency, reducing information asymmetry, and improving market discipline in the National Financial System or SFN. The proposal has been issued in context of the Sustainability Dimension of the BCB Agenda, which acknowledges the relevance of social, environmental, and climate-related issues for the financial stability of Brazil..
Related Links (in English and Portuguese)
- News Release on Consultation
- Consultation Paper and Disclosure Templates (PDF)
- Resolution on Open Banking
Comment Due Date: June 05, 2021
Effective Date: Publication Date (Open Banking)
Keywords: Americas, Brazil, Banking, Open Banking, ESG, Climate Change Risk, TCFD Recommendations, Disclosures, Regtech, BCB
Previous ArticleJFSA Proposes to Amend Supervisory Guidelines for Major Banks
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.