BCBS published a summary of its June meeting in Basel. At the meeting, BCBS members discussed a range of policy and supervisory issues and took stock of the members' implementation of post-crisis reforms. This was the first Basel Committee meeting chaired by Pablo Hernández de Cos, Governor of the Bank of Spain, following his appointment by Governors and Heads of Supervision in March 2019. The Committee discussed matters related to financial technology and crypto-assets and its work program for evaluating the impact of its post-crisis reforms, with the Committee committing to publish additional information of this work in due course.
At the meeting, the Committee:
- Agreed on a targeted and limited revision of the leverage ratio to allow margin received from a client to offset the exposure amounts of client-cleared derivatives. This revision, which will be published next week, seeks to balance the robustness of the leverage ratio as a safeguard against unsustainable levels of leverage with the G20 Leaders' commitment to promote the central clearing of standardized derivative contracts. The Committee will monitor the effect of this revision on the leverage ratio framework.
- Agreed on a set of disclosure requirements to curb leverage ratio window dressing. The standard will be revised to require banks to disclose their leverage ratios based on the quarter-end and average values of securities financing transactions. These disclosure requirements will be published next week.
- Approved a report on Pillar 2 supervisory practices and approaches, which will be published shortly.
- Reviewed the reports that assessed the implementation of the Net Stable Funding Ratio and large exposures standards in Australia, Canada, and India. Publication of these reports is expected in July.
- Agreed to join Network for Greening the Financial System (NGFS) as an observer, post discussions on the implications of the first comprehensive NGFS report.
- Agreed to conduct further work on financial technology, including on the risk management challenges associated with the use of artificial intelligence and machine learning in financial services.
- Will continue to assess the risks from crypto-assets and the best ways to address them.
- will publish, in due course, a a report on the regulatory and supervisory implications of open banking and application programming interfaces.
Related Link: Press Release
Keywords: International, Banking, Fintech, Crypto-Assets, Pillar 2, Leverage Ratio, Disclosures, Large Exposures, Climate Change Risks, BCBS
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.