JFSA Issues Final Basel Rules, Proposes Guidance on Climate Risk
The Financial Services Agency of Japan (JFSA) finalized amendments to the regulatory notices pertaining to Pillar 1 and Pillar 3 capital requirements to implement the final Basel III framework. Additionally, JFSA published the draft guidance on climate-related risk management and the draft order on over-the-counter (OTC) derivatives transactions.
Below are the key highlights of the recent updates:
- Post consultation, JFSA has finalized the amendments on operational risk capital requirements (March 2021), credit risk, credit valuation adjustment (CVA) risk, market risk capital requirements (September 2021), and leverage ratio requirements (October 2021). For internationally active financial institutions and non-internationally active financial institutions that use internal model-based approaches for measuring risks, the amendments will be applied from March 31, 2024. Also, for non-internationally active financial institutions that do not use internal model-based approaches for measuring risks, the amendments will be applied from March 31, 2025. Financial institutions that desire an early implementation on or after March 31, 2023 may do so by submitting a notification to JFSA.
- JFSA also proposed the "Supervisory Guidance on Climate-related Risk Management and Client Engagement," in response to the recommendations prescribed in a report published by the Expert Panel on Sustainable Finance in June 2021. The draft guidance documents viewpoints of supervisory dialog regarding climate-related risk management of financial institutions; it also covers the engagement of financial institutions with the clients to support the clients’ responses to climate-related opportunities and risks, including possible approaches and case examples of client engagement. The guidance is non-binding and serves as a baseline for supervisory dialog between JFSA and financial institutions to promote better practices at financial institutions. The consultation is open until May 26, 2022.
- JFSA proposed draft "Cabinet Office Order to Amend the Cabinet Office Order on Restrictions on Over-the-Counter Derivatives Transactions, etc." and the draft regulatory notice specifying cases concerning other inevitable grounds for not being able to provide trade information, such as data on centrally and/or non-centrally cleared trades. The proposal mainly intends to enhance the preservation and reporting items under the system of OTC derivatives transaction information to enable international data aggregation. JFSA is requesting comments until May 30, 2022. The proposal is based on publications on harmonization of critical OTC derivatives data elements, unique product identifies, and unique transaction identifier, by the Committee on Payments and Market Infrastructures under the Bank for International Settlements.
Keywords: Asia Pacific, Japan, Banking, Basel, Pillar 1, Pillar 3, Regulatory Capital, Operational Risk, Market Risk, Credit Risk, CVA Risk, Leverage Ratio, OTC Derivatives, Climate Change Risk, ESG, Guidance, JFSA, Headline
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
DNB Publishes Regulatory and Reporting Updates in April 2022Related Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.