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Basel III: “some jurisdictions report challenges in meeting agreed deadlines”

The seventh report from the Basel Committee on Banking Supervision to update the G20 Leaders on progress by the 27 Basel Committee member jurisdictions in implementing the Basel III regulatory reforms reports that: “Overall, further progress has been made since last year’s update to the G20 Leaders in implementing the Basel III standards in a full, timely and consistent manner. Banks continue to build higher and better quality capital and liquidity buffers while reducing their leverage. However, challenges remain, in particular regarding the timely regulatory adoption of Basel standards in some jurisdictions. In order to maximise the benefits of its reforms, the Basel Committee will continue to monitor closely the implementation and impact of its standards and report to the G20 on progress.”

Missing domestic regulations

The Committee euphemistically report that “a considerable number of revised Basel standards await transposition into domestic regulations over the next couple of years” including:

  • margin requirements for non-centrally cleared derivatives (by September 2016)
  • the revised Pillar 3 framework (by end-2016)
  • the standardised approach for measuring counterparty credit risk (by January 2017)
  • capital requirements for central counterparty (CCP) exposures (by January 2017)
  • capital requirements for equity investments in funds (by January 2017).

The committee believe that these delays are due to domestic legislative or rule-making processes. In addition, some jurisdictions report that banks face difficulties in adjusting their information systems to meet and report on the new requirements.

Level playing field issues

The committee report that “Delayed implementation may have implications for the level playing field, and puts unnecessary pressure on jurisdictions that have implemented the standards based on the agreed timelines. A concurrent implementation of global standards is all the more important, as many jurisdictions serve as hosts to internationally active banks.”

CTMfile take: Differing speeds of Basel III implementation are inevitable and causing havoc. However, it will continue, so cash and liquidity management will still have to be done at a jurisdiction level. The Basel III committee’s call to action is sad.

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