Featured Product

    FED Publishes Notices Related to Stress Testing and Pillar 2 Guidance

    June 09, 2021

    FED announced plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility, which is a temporary emergency lending facility that closed on December 31, 2020. In addition, FED published two notices in the Federal Register on the recordkeeping provisions associated with stress testing guidance (FR 4202) and on the Basel II Interagency Pillar 2 Supervisory Guidance (FR 4199).

    The following are the key highlights of the updates from FED:

    • FED is adopting a proposal to extend for three years, without revision, the recordkeeping provisions associated with Stress Testing Guidance (FR 4202). The Stress Testing Guidance recommends that banking organizations have a stress testing framework that includes clearly defined objectives, well-designed scenarios tailored to the banking organization's business and risks, well-documented assumptions, conceptually sound methodologies to assess potential impact on the banking organization's financial condition, informative management reports, and recommended actions based on stress test results. The Guidance also recommends organizations to have policies and procedures for a stress testing framework. FED has extended the FR 4202 without revision to ensure compliance with the Paperwork Reduction Act. However, whether and to what extent changes should be made to the guidance, in light of recent amendments made by FED to its stress testing rules, is under consideration. FED will publish any proposed changes to the FR 4202 via a separate notice for comment. 
    • FED is seeking comments on a proposal to extend for three years, without revision, the Basel II Interagency Pillar 2 Supervisory Guidance (FR 4199). The Pillar 2 Guidance is intended to assist banking organizations that are subject to the Basel II advanced approaches capital adequacy framework in applying that framework. Advanced approaches banking organizations are required to use an internal ratings-based approach to calculate regulatory credit risk capital requirements and advanced measurement approaches to calculate regulatory operational risk capital requirements. Banking organizations are required to meet certain qualification requirements before they can use the advanced approaches framework for risk-based capital purposes. The Pillar 2 Guidance sets the expectation that such organizations maintain certain documentation as described in certain parts of the guidance. FED consulted with FDIC and OCC and confirmed that there will be no revisions to the guidance and no revision to the time per response estimates. Comments must be submitted by August 09, 2021.
    • FED announced plans to begin winding down the portfolio of the Secondary Market Corporate Credit Facility (SMCCF), which is a temporary emergency lending facility that closed on December 31, 2020. The SMCCF proved vital in restoring market functioning last year, supporting the availability of credit for large employers and bolstering employment through the COVID-19 pandemic. SMCCF portfolio sales will be gradual and orderly and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds. The Federal Reserve Bank of New York, which manages the operations of the SMCCF, will announce additional details soon and before sales begin. The SMCCF was established with the approval of the Treasury Secretary and equity provided by the Treasury Department under the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act.

     

    Related Links

    Comment Due Date: August 09, 2021

    Keywords: Americas, US, Banking, FR 4202, FR4199, Stress Testing, Reporting, Regulatory Capital, COVID-19, SMCCF, Credit Risk, Lending Facility, Pillar 2, Basel, FED

    Featured Experts
    Related Articles
    News

    PRA Proposes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    PRA proposed rules (in CP12/21) for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA).

    June 21, 2021 WebPage Regulatory News
    News

    ECB Extends Leverage Ratio Relief for Banks Until March 2022

    ECB Banking Supervision announced that euro area banks it directly supervises may continue to exclude certain central bank exposures from the leverage ratio until March 2022.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Treatment of Credit Valuation Adjustments

    OSFI decided to increase the Domestic Stability Buffer from 1.00% to 2.50% of total risk-weighted assets, with effect from October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    HKMA Requires Banks to Submit Plans for Fintech Adoption

    HKMA is requesting banks to participate in a tech baseline assessment, which forms part of the HKMA Fintech 2025 strategy.

    June 18, 2021 WebPage Regulatory News
    News

    OSFI Consults on Operational Risk Capital Data Management Expectations

    OSFI published two documents to consult on the management of operational risk capital data for institutions required, or for those applying, to use the Basel III standardized approach for operational risk capital in Canada.

    June 18, 2021 WebPage Regulatory News
    News

    NGFS on Addressing Financial Stability Issues from Biodiversity Loss

    The NGFS Study Group on Biodiversity and Financial Stability published a Vision paper exploring the case for action in addressing the financial stability concerns arising from biodiversity loss.

    June 18, 2021 WebPage Regulatory News
    News

    ACPR Publishes CREDITIMMO Version 2.3.0 Taxonomy for Banks

    ACPR published the final version of CREDITIMMO 2.3.0 taxonomy for the decree of October 31, 2021.

    June 18, 2021 WebPage Regulatory News
    News

    EC Prolongs Italian Guarantee Scheme for Non-Performing Loans

    EC, has approved, under the EU State Aid rules, the fourth prolongation of the Italian guarantee scheme to facilitate the securitization of non-performing loans.

    June 18, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7128