July 06, 2018

OSFI is consulting on revisions to the Capital Adequacy Requirements (CAR) Guideline for implementation in the first quarter of 2019. The changes mainly relate to the domestic implementation of the standardized approach to counterparty credit risk (SA-CCR), the revisions to the capital requirements for bank exposures to central counterparties (CCPs), and revisions to the securitization framework. Comments are due by August 31, 2018.

The objective of OSFI is to ensure that the guideline remains comprehensive and that the requirements reflect the underlying risk. Implementation date is November 01, 2018 for institutions with an October 31 year-end and January 01, 2019 for institutions with a December 31 year-end. Other proposed changes to the guideline include the following:

  • Clarifications to the capital treatment for right-of-use assets resulting from the adoption of IFRS 16 on Leases, beginning in the first quarter of 2019. This treatment will become effective for institutions on their adoption of IFRS 16.
  • Changes to the capital floor, as outlined in the letter issued by OSFI on January 12, 2018, and removal of the Credit Valuation Adjustment (CVA) phase-in and other transitional arrangements that conclude at the end of 2018.
  • Recognition of Kroll Bond Rating Agency Inc. as an eligible external credit assessment institution (ECAI) for capital purposes, effective immediately.
  • Clarifications throughout the CAR Guideline in response to questions received from the industry as part of the regular annual updates.

 

Related Links

Comment Due Date: August 31, 2018

Effective Date: November 01, 2018/January 01, 2019 (depending on fiscal year-end)

Keywords: Americas, Canada, Banking, CAR, SA-CCR, IFRS 16, CCP, Securitization Framework, Capital Floor, Basel III, OSFI

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