BCBS Releases 18th Progress Report on Basel III Adoption

In Asia Pacific, Hong Kong, Korea and Indonesia have in particular made significant progress towards implementing the final Basel III standards.

The BCBS (Basel Committee on Banking Supervision) has issued its eighteenth progress report on the adoption status of the Basel III standards in member jurisdictions as of end-May 2020

The report includes the Basel III post-crisis reforms published in December 2017 and the finalised minimum capital requirements for market risk in January 2019. According to the March 2020 announcement made by the BCBS’s oversight body – the GHOS (Governors and Heads of Supervision), these reforms will take effect from 1 January 2023.

Since the previous report published in October 2019, member jurisdictions have made further progress in adopting the Basel III standards, and have additionally taken measures to address financial stability concerns arising from the Covid-19 pandemic.

Asia Pacific updates:

Australia:

  • Draft rule on capital requirements for equity investments in funds was published in November 2019, proposing to maintain existing approach which was deemed super-equivalent.
  • Draft rule on TLAC holdings was published in November 2019.
  • Final rule on revised operational risk framework was published in December 2019 and takes force from 1 January 2023.

China:

  • Draft securitisation framework about to be published for consultation.
  • D-SIB Assessment Rule has been published for consultation in November 2019.

Hong Kong:

  • Final rules on CCP capital requirements were published in April 2020 and are set to take effect from 30 June 2021
  • Final SA-CCR rules were published in April 2020 and are set to take effect from 30 June 2021
  • Draft rules on the revised CVA framework are expected to be published in 2021
  • Draft rules on the revised minimum requirements for market risk are expected to be published in 2021 and enter into force (initially for reporting only) on 1 January 2023.
  • The grace period for the supervisory framework for measuring and controlling large exposures has ended and the final rules took effect from 1 January 2020.

India:

  • Directions regarding variation margin requirements for non-centrally cleared derivatives will be issued shortly and directions on initial margin consultation with stakeholders are in progress.
  • The final NSFR rule was issued on 17 May 2018; implementation of the guidelines have been deferred six months to 1 October 2020.
  • NSFR disclosure requirement also to take effect on 1 October 2020.

Indonesia:

  • Consultative paper on TLAC holdings was published in February 2020.
  • Consultative paper on the revised CVA framework was issued in October 2019.
  • Consultative paper on the revised minimum requirements for market risk was issued in October 2019.
  • Regulation was issued and took force since December 2019 which integrates the adoption process of both the 2014 and 2017 leverage ratio frameworks
  • Guidelines on disclosing Pillar 3 information were issued in December 2019, and a regulation which will include the remaining Pillar 3 disclosure templates is in the process of being issued.

Japan:

  • Final rule on the supervisory framework for measuring and controlling large exposures was published in October 2019 and took force from April 2020.

Korea:

  • Final rule on the revised standardised approach for credit risk was published in April 2020 (to only jurisdiction to do so) and takes force from January 2023. Subject to supervisory approval, banks can early-implement the final rule from 30 June 2020.
  • Final rule on the revised IRB approach for credit risk was published in April 2020 and takes force from January 2023.
  • Final rule on the revised operational risk framework was published in April 2020 and takes force from January 2023.
  • Final rule on the output floor was published in April 2020 and takes force from January 2023.
  • Final rule on IRRBB (interest rate risk in the banking book) was published and took force from December 2019.

Singapore:

  • none

The full report is available here.

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