HKMA Revises Implementation Timeline for Basel Standards
HKMA issued a circular informing the industry about its intention to revise the target effective dates for the revised frameworks on credit risk, operational risk, output floor, leverage ratio, market risk, and credit valuation adjustment risk. The disclosure requirements associated with these revised frameworks will also take effect according to the effective dates, for the corresponding frameworks, specified in the circular. HKMA is revising the target effective dates of these frameworks to provide the industry with additional time to prepare for the implementation of the revised capital standards in the Basel III final reform package amid competing priorities.
HKMA is revising the target effective dates of the standards in Hong Kong as follows:
- The revised frameworks on credit risk, operational risk, output floor, and leverage ratio will take effect as minimum requirements from July 01, 2023, instead of January 01, 2023.
- The industry will be provided with an additional six-month time window for implementation of the revised market and credit valuation adjustment risk frameworks. This means locally incorporated authorized institutions will be required to implement the new market and credit valuation adjustment risk frameworks for reporting purposes by July 01, 2023. The new frameworks will take full effect from a date no earlier than January 01, 2024. During the reporting-only period, locally incorporated authorized institutions will still be required to calculate their regulatory market and credit valuation adjustment risk capital charges based on the existing Banking (Capital) Rules.
To facilitate timely implementation, HKMA aims to substantially complete the drafting of the rules by the end of 2022 to enable authorized institutions to make use of the lead time to finalize the necessary system changes prior to the effective dates.
Keywords: Asia Pacific, Hong Kong, Banking, Basel, Credit Risk, Operational Risk, Market Risk, CVA Risk, Leverage Ratio, Output Floor, Regulatory Capital, Banking Capital Rules, Implementation Timeline, Reporting, HKMA
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