Featured Product

    OSFI Finalizes Guidelines on CAR and Leverage Requirements

    October 30, 2018

    OSFI published the final version of the leverage requirements guideline and the capital adequacy Requirements (CAR) guideline for implementation in the first quarter of 2019. The main revisions relate to the domestic implementation of the standardized approach to counterparty credit risk (SA-CCR), capital requirements for bank exposures to central counterparties (CCPs), and the securitization framework. The changes become effective on November 01, 2018 for institutions with an October 31 year-end and on January 01, 2019 for institutions with a December 31 year-end.

    CAR Guideline. In addition to the above changes, OSFI has clarified the capital treatment for right-of-use assets resulting from the adoption of IFRS 16, beginning January 01, 2019. This treatment will become effective for institutions on their adoption of IFRS 16. Moreover, the guideline includes the changes to the capital floor that were communicated to industry in January 2018. OSFI has also removed the Credit Valuation Adjustment (CVA) phase-in and other transitional arrangements that conclude at the end of 2018. The guideline now lists Kroll Bond Rating Agency Inc. as an eligible external credit assessment institution (ECAI) for capital purposes, which became effective on July 06, 2018. Finally, OSFI has provided clarifications throughout the Guideline in response to questions received from the industry as part of the regular annual updates. The attached table in Annex 1 summarizes comments received and provides an explanation of how the comments have been addressed in the guideline.

    Leverage Requirements Guideline. The leverage requirements guideline now incorporates the standardized approach to counterparty credit risk (SA-CCR) for calculating derivatives exposures. This approach will replace the Current Exposure Method for computing counterparty credit risk exposure amounts for derivatives. The new method will align with the implementation of SA-CCR under Chapter 4 of the CAR guideline in the first quarter of  2019. The revised leverage requirements guideline also includes changes to the treatment of securitized assets that align with revisions to the operational requirements for recognition of significant risk transfer in Chapter 7 of the CAR guideline. OSFI has also aligned treatment of the credit conversion factors for off-balance sheet securitization exposures with those included under revisions to Chapter 7 of the CAR guideline. The attached table in Annex 1 summarizes comments received and provides an explanation of how the comments have been addressed in the guideline. 

    The December 2017 Basel III reforms include revisions to the Basel III leverage ratio framework, including a buffer for global systemically important banks (G-SIBs) and other technical refinements to the leverage ratio exposure measure. OSFI will consider these revisions separately as part of the domestic implementation of the Basel III reforms and will consult stakeholders as part of the consultation process for any future changes to the leverage requirements guideline. 

     

    Related Links

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

    Keywords: Americas, Canada, Banking, Basel III, CAR Guideline, Leverage Requirements Guideline, Securitization Framework, SA-CCR, Leverage Ratio, Capital Floor, OSFI

    Featured Experts
    Related Articles
    News

    FSB Examines Financial Stability Aspects of Bigtech and Cloud Services

    FSB published two reports that consider the financial stability implications from the offering of financial services by bigtech firms and the adoption of cloud computing and data services across a range of functions at financial institutions.

    December 09, 2019 WebPage Regulatory News
    News

    APRA Specifies Capital Treatment of Equity Investments in ABGF

    APRA published a letter to the authorized deposit-taking institutions outlining the regulatory capital treatment of their equity investments in the Australian Business Growth Fund (ABGF).

    December 09, 2019 WebPage Regulatory News
    News

    BoE Updates XBRL Filing Manual for Reporting Under Solvency II

    BoE has updated the XBRL filing manual (to Version 5.0) to help firms and software vendors create XBRL instance documents for Solvency II Pillar 3 and BoE Insurance reporting.

    December 09, 2019 WebPage Regulatory News
    News

    HKMA Proposes Changes to Module on Supervision of Concentration Risk

    HKMA issued a circular proposing revisions to the Supervisory Policy Manual module CR-L-1 on consolidated supervision of concentration risks under the Banking (Exposure Limits) Rules (BELR) Rule 6.

    December 09, 2019 WebPage Regulatory News
    News

    EBA Publishes Action Plan on Sustainable Finance

    EBA published the Action Plan on sustainable finance for banks.

    December 06, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for December 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to three questions under the Capital Requirements Regulation (CRR) and the second Payment Services Directive (PSD 2).

    December 06, 2019 WebPage Regulatory News
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    ESMA Consults on Guide to Internal Controls for Credit Rating Agencies

    ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs).

    December 05, 2019 WebPage Regulatory News
    News

    EU Finalizes Directive and Prudential Rules for Investment Firms

    EU published, in the Official Journal of the European Union, the Directive (2019/2034) and Regulation (2019/2033) on the prudential requirements and supervision of investment firms.

    December 05, 2019 WebPage Regulatory News
    News

    OSFI Revises Guideline on Principles for Management of Liquidity Risk

    OSFI finalized Guideline B-6 on the principles for the management of liquidity risk.

    December 05, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4292