BCB Issues Updates on FRTB, Governance, and Liquidity Rules
The Central Bank of Brazil (BCB) is consulting on changes related to certain aspects of the regulatory framework for market risk, based on the Fundamental Review of the Trading Book (FRTB) under Basel III. The consultation represents the second phase—out of the four expected phases—of the process of reviewing the prudential standard for determining the capital requirements related to market risk. The consultation period for this proposal ends on September 06, 2021 and these second-phase requirements have been proposed to come into force on July 01, 2022.
In addition, BCB published Resolution No. 111 that sets out the criteria for classifying instruments in the trading book or banking book, the governance requirements related to the trading desks in which instruments subject to market risk are managed, and the requirements for the recognition of internal transfers of risk in the determination of the minimum requirements. This resolution enters into force on March 01, 2022. Also published was Resolution No. 112, which establishes new regulation on the Governance, Risks, and Controls Committee (GRC). The GRC has the objective of defining guidelines and strategies related to corporate governance, strategic and risk management, and internal controls as well as adopting measures to systematize practices in these areas within the scope of BCB. This resolution enters into force on the date of its publication.
Finally, BCB established the Financial Liquidity Facilities in national currency (LFL) to enhance its role as lender of last resort. To be permanently available to financial institutions, the Financial Liquidity Facilities in the form of a loan against a collateral basket will start their operations on November 08, 2021 and become fully operational from November 16, 2021. The Financial Liquidity Facilities include Immediate Liquidity Facility and Term Liquidity Facility. Immediate Liquidity Facility is a very short-term standing facility (up to 5 business days). With the objective of meeting liquidity needs arising from mismatches between the assets and liabilities of financial institutions, the provision of the Term Liquidity Facility—with a maximum term of 359 calendar days— is a discretionary facility, by request of the financial institution. The Term Liquidity Facility may also be offered at the initiative of the BCB—in case of market dysfunction—by which pre-authorized financial amounts will be available for financial institutions, without the need for an individual authorization.
Related links (in Portuguese)
- Press Release on Consultation
- Consultation Document (PDF)
- Resolution No. 111
- Resolution No. 112
- Press Release on Financial Liquidity Facilities (in English)
- Resolution on Financial Liquidity Facilities
Comment Due Date: September 06, 2021
Effective Date: July 01, 2022 (Market Risk Rules)/March 01, 2022 (Resolution No. 111)/July 06, 2021 (Resolution No. 112)
Keywords: Americas, Brazil, Banking, Basel, Market Risk, Regulatory Capital, FRTB, Trading Book, Governance, Liquidity Risk, Liquidity Facility, BCB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint
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.
EBA Issues Guide on Bank Resolvability, Consults on Transferability
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).
MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets
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.
FCA Registers Securitization Repositories; PRA Issues 2022 Priorities
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.
EC Regulation Sets Out Methods for Measuring K-Factors Under IFR
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.
BIS Studies How Platform Models Impact Financial Stability & Inclusion
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.
CBE Issues Additional Measures to Ease Disruptions from Pandemic
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.
ESAs Publish List of Financial Conglomerates for 2021
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.
APRA Licenses Two More Banks, Reduces Committed Liquidity Facility
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.
