The Basel Committee on Banking Supervision has proposed changes to the Basel III framework in a consultative document, Revisions to the Basel III leverage ratio framework.
The document proposes a set of changes to the standard released in January 2014, as part of the regulatory reform programme that the Basel Committee has committed to finalise by the end of 2016.
The proposed revisions cover the following issues:
- to measure derivative exposures, the committee is proposing to use a modified version of the standardised approach for measuring counterparty credit risk exposures (SA-CCR) instead of the Current Exposure Method (CEM);
- to ensure consistency across accounting standards, two options are proposed for the treatment of regular-way purchases and sales of financial assets;
- clarification of the treatment of provisions and prudential valuation adjustments for less liquid positions, so as to avoid double-counting; and
- alignment of the credit conversion factors for off-balance sheet items with those proposed for the standardised approach to credit risk under the risk-based framework.
Comments from the public can be submitted through the Bank for International Settlements website by Wednesday 6 July 2016. All comments will be published on the BIS website unless a respondent specifically requests confidential treatment.
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