BCBS met to discuss a range of policy and supervisory issues and to take stock of the implementation of post-crisis reforms in member jurisdictions. During the meeting, BCBS agreed to publish discussion papers, reports, and consultation papers on policy and supervisory issues related to credit valuation adjustment risk framework, market risk framework, prudential treatment of crypto-assets, and implementation of the net stable funding ratio (NSFR) and large exposures standards. Also discussed was work in the area of banking and supervisory implications of financial technology. The meeting was held in Madrid on October 30-31, 2019. Additionally, BCBS announced that Canada will host the 21st International Conference of Banking Supervisors (ICBS), which will take place on October 21-22, 2020 in Vancouver.
At the meeting, BCBS agreed to take the following steps:
- Consult on a final set of limited and targeted adjustments to the credit valuation adjustment risk framework. The paper will be published in November. Members reaffirmed their expectation to implement the framework alongside the accompanying Basel III standards on January 01, 2022.
- Consult on a set of revised disclosure requirements related to the market risk framework finalized in January 2019 and to consult on disclosure templates for sovereign exposures of banks, which would be voluntary to implement. These papers will be published next month.
- Publish a discussion paper on the prudential treatment of crypto-assets. BCBS reiterated its view that the prudential treatment of banks' cryptoasset exposures should appropriately reflect the high degree of risk of cryptoassets. In light of ongoing initiatives in crypto-asset markets, BCBS will seek the views of stakeholders on a wide range of issues related to the prudential treatment of crypto-assets.
- Review reports that assessed the implementation of NSFR and large exposures standards in Argentina and China. Publication of these reports is expected in November.
- Publish a report on open banking and application programming interfaces next month.
- Consult on guidelines to enhance cooperation between prudential regulatory authorities and authorities in charge of anti-money laundering and combating the financing of terrorism. These proposed guidelines will be published next month.
Going forward, BCBS will conduct a set of deep-dive assessments on the risk management challenges associated with use of artificial intelligence and machine learning in financial services banks, dependencies on unregulated third parties and the implications for outsourcing supervisory regimes, and supervisory challenges related to data governance and management, data security, portability, and recovery. BCBS also took stock of benchmark rate reforms and discussed their potential regulatory and supervisory implications, stemming from the transition of banks to alternative reference rates. BCBS places high priority on this issue and expects all banks to be adequately prepared to meet the transition timeline. BCBS will consider whether any further regulatory or supervisory measures are warranted to help achieve this outcome.
As part of the ongoing work program on evaluating and monitoring the impact of its post-crisis reforms, BCBS also discussed the usability of capital buffers and published a newsletter to reiterate the importance of the capital buffer framework and emphasize that buffers are designed to be usable. At the meeting, BCBS discussed additional supervisory initiatives, including the implementation of its guidance for managing risks associated with the settlement of foreign-exchange transactions and the need for further measures to mitigate such risks. The Committee also exchanged views on work on the climate-related financial risks and the audit of expected credit loss accounting.
Keywords: International, Banking, Post-Crisis Reforms, Market Risk, NSFR, Large Exposures, Fintech, ICBS, Capital Buffer, Basel III, CVA Risk, BCBS
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA updated the report on the implementation of selected COVID-19 policies.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.