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WOCCU Supported Changes Adopted in Basel Credit Valuation Adjustment Risk Standard

The Basel Committee on Banking Supervisiony published an updated standard for the regulatory capital treatment of credit valuation adjustment (CVA) risk for derivatives and securities financing transactions.

The revisions for the regulatory capital treatment of CVA risk include:

  • recalibrated risk weights;
  • different treatment of certain client cleared derivatives; and
  • an overall recalibration of the standardised and basic approach.

WOCCU supported bringing the Credit Valuation Adjustment framework in alignment with the finalization of the market risk framework completed in 2019. 

A copy of the standard can be viewed here.

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Basel

FSB and Basel Committee Move to Transition Away from LIBOR by End of 2021

The Financial Stability Board (FSB) and Basel Committee on Banking Supervision (BCBS) published a report entitled, Supervisory issues associated with benchmark transition: Report to G20, which outlines supervisory recommendations LIBOR transition. The report concludes that, “Continued reliance of global financial markets on LIBOR poses clear risks to global financial stability. Transition away from LIBOR by end-2021 requires significant commitment and sustained effort from both financial and non-financial institutions (FIs and non-FIs) across many jurisdictions.” The report also includes surveys initiated by the FSB, the BCBS and the International Association of Insurance Supervisors (IAIS), developed to address remaining challenges to the benchmark transition.

The report outlined three recommendations that support LIBOR transition in jurisdictions with LIBOR exposures:

  • Identification of transition risks and challenges – authorities and standard-setting bodies to issue public statements to promote awareness and engage with trade associations, and authorities to undertake regular surveys of LIBOR exposure and to request updates from financial institutions.
  • Facilitation of LIBOR transition – authorities to establish a formal transition strategy supported by adequate resources and industry dialogue. Supervisory authorities should consider increasing the intensity of supervisory actions when the preparatory work of individual banks is unsatisfactory.
  • Coordination – authorities to promote industry-wide coordination, maintain dialogue on the adoption of fallback language, consider identifying legislative solutions, where necessary, and exchange information on best practices and challenges. The FSB and the standard-setting bodies will coordinate at the international level to identify key common metrics for monitoring transition progress.”

More information on the BSB and BCBS’ LIBOR transition report can be found here and here.

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Basel, Financial Stability Board

Basel AML/CFT Guidance includes WOCCU Recommendations on Proportionality/Financial Inclusion

The Basel Committee on Banking Supervision today issued the updated version of its guidelines on Sound management of risks related to money laundering and financing of terrorism, with guides on the interaction and cooperation between prudential and anti-money laundering and combatting the financing of terrorism (AML/CFT) supervisors.

The revisions set out principles and recommendations for information exchange and cooperation in relation to: (i) internal procedures or a bank/credit union; (ii) ongoing supervision; and (iii) enforcement actions. Also, possible mechanisms to facilitate such cooperation in the jurisdictional and international context are provided.  The guidelines are consistent and complimentary to those standards issued by the Financial Action Task Force (FATF).

WOCCU commented on this proposal in early 2020 urging reinforcement of the principles of proportionality and risk-based approaches to AML/CFT noting that regulatory burdens often fall disproportionately on credit unions often preventing access to responsible and affordable credit to underserved communities. 

The issuance by the Basel Committee includes specifically with respect to AML/CFT burdens should be "
proportional and risk-based, informed by banks’ own risk assessment of ML/FT risks."  Further, with respect to Member/Customer Due diligence the guidance notes that "It is important that the customer acceptance policy is not so restrictive that it results in a denial of access by the general public to banking services, especially for people who are financially or socially disadvantaged."  

WOCCU welcomes this guidance which should provide direction to national-level regulators to properly tailor AML/CFT requirements for credit unions which will in turn promote financial inclusion.

A copy of the newly issued guidance can be viewed here.

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Basel

Basel Committee Discusses COVID-19

The Basel Committee met to discuss the impact to date of the coronavirus disease (Covid-19) pandemic on the global banking system.

The Committee noted that the measures taken to date at the onset of the pandemic have helped mitigate some of the short-term financial stability risks. All members reaffirmed their expectation of full, timely and consistent implementation of all Basel III standards based on the revised timeline endorsed by the Group of Governors and Heads of Supervision.

The Committee noted that the pandemic has entered a new phase and that the impact and response vary across jurisdictions and the global economic outlook remains uncertain. Banks and supervisors must remain vigilant to the risks and vulnerabilities stemming from the pandemic to ensure that the global banking system remains financially and operationally resilient.

They noted that the Basel III Framework includes capital buffers designed to absorb losses in times of stress and to help maintain the flow of credit to the real economy.  Using these capital resources to support the real economy and absorb losses should take a priority during the crisis. 

Additionally, the Committee approved two measures that were commented on by WOCCU during the consultation process as follows:

  • final revisions to the credit valuation adjustment risk framework, which will be published in the coming weeks; and
  • a technical amendment on the prudential treatment of non-performing loan securitisations, which will be published for consultation next week.

Members also took stock of banks' progress on benchmark rate reforms and discussed potential regulatory implications stemming from banks' transition to alternative reference rates. The Committee places high priority on this issue and expects all banks to be adequately prepared to meet the transition timeline. 

The Committee also reviewed the responses received to its discussion paper on the prudential treatment for crypto-assets and approved a workplan for the next phase of the work, with a view to future consultation.

A copy of the press release can be viewed here.

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Basel

FAQs added to Basel Framework

The Basel Committee on Banking Supervision added to a number of Frequently Asked Questions (FAQs) to the Basel Framework to help answer  various common questions. The questions cover a range of issues including the reform of benchmark reference rates, liquidity, and clarifications relating to the standardized approach to operational risk. 

A copy of the FAQs can be viewed here.

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Basel

Basel Committee Releases Survey Regarding Climate Related Financial Risk Initiatives

The Basel Committee published their, “Climate-related financial risks: a survey on current initiatives”, summarizing members’ existing regulatory and supervisory initiatives on climate-related financial risk. The Basel Committee created the Task Force on Climate-related Financial Risks (TFCR) to improve global financial stability by performing “a stocktake of members’ existing regulatory and supervisory initiatives on climate-related financial risks;” initiating “a set of analytical reports on climate-related financial risks, including a literature review, and reports on the transmission channels of such risks to the banking system as well as on measurement methodologies”; and developing “effective supervisory practices in order to mitigate climate-related financial risks”.

The survey suggests that:

  • The majority of Basel Committee members consider it appropriate to address climate-related financial risks within their existing regulatory and supervisory frameworks;
  • an overwhelmingly large share of members have conducted research related to the measurement of climate-related financial risks, while a number of members identified operational challenges in assessing climate-related financial risks such as data availability, methodological challenges, and difficulties in mapping of transmission channels. A majority of the members have raised risk awareness with banks through different channels, and many banks are disclosing information related to climate-related financial risks to some extent; and
  • approximately two-fifths of members have issued, or are in process of issuing, more principles based guidance regarding climate-related financial risks. However, the majority of members have not factored, or have not yet considered factoring, the mitigation of such risks into the prudential capital framework.
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Basel

Basel Committee Issues WOCCU urged Covid-19 Regulatory Relief

The Basel Committee on Banking Supervision released technical guidance setting out additional measures to alleviate the impact of Covid-19 on the global banking system.

Specifically

  1. Expected credit loss accounting:  The Basel Committee notes that regarding the SICR assessment, relief measures to respond to the adverse economic impact of Covid-19 such as public guarantees or payment moratoriums, granted either by public authorities, or by banks on a voluntary basis, should not automatically result in exposures moving from a 12-month ECL to a lifetime ECL measurement. 
  2. Expected credit loss accounting transitional arrangements:  The Basel committee is allowing for the implementation of several transitional arrangements including applying exiting transitional arrangements even if those were not implemented initially.  Additionally, a 2 year period comprising the years 2020 and 2021, jurisdictions may allow banks to add-back up to 100% of the transitional adjustment amount to CET1. The “add-back” amount must then be phased-out on a straight line basis over the subsequent 3 years. 
  3. Capital treatment of non-performing loans, loans subject to moratorium, or past due:  The Basel Committee also provided treatment for a loan that might otherwise be considered troubled or in default  noting that jurisdictions can apply relief criterion for payment moratorium periods (public or granted by banks on a voluntary basis) relating to the Covid-19 outbreak such that they can be excluded by banks from the counting of days past due. Another criterion used is whether a bank considers that the borrower is unlikely to pay its credit obligations. The Committee has agreed that this assessment should be based on whether the borrower is unlikely be able to repay the rescheduled payments. 
  4. Non-centrally cleared derivatives: The Committee and the International Organization of Securities Commissions have agreed to defer the final two implementation phases of the framework for margin requirements for non-centrally cleared derivatives by one year.
WOCCU has urged this regulatory flexibility during the Covid-19 crisis.  A copy of the guidance can be viewed here.
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Basel

Basel Committee Delays Basel III Implementation to assist with COVID-19

The Basel Committee's oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), provided relief to help financial institutions respond to the impact of Covid-19 on the global banking system by delaying deadlines for the implementation of the Basel III framework.

The following changes were adopted by the GHOS to the implementation timeline of the outstanding Basel III standards:

  • The implementation date of the Basel III standards finalised in December 2017 has been deferred by one year to 1 January 2023. The accompanying transitional arrangements for the output floor has also been extended by one year to 1 January 2028.
  • The implementation date of the revised market risk framework finalised in January 2019 has been deferred by one year to 1 January 2023.
  • The implementation date of the revised Pillar 3 disclosure requirements finalised in December 2018 has been deferred by one year to 1 January 2023.
A copy of the press release can be viewed here.
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Basel

Basel Committee Issues Covid-19 Statement

The Basel Committee on Banding Supervision (Basel Committee) is coordinating policy and supervisory response to the COVID-19 (Coronavirus) crisis and has issued a statement on their efforts.  The Basel Committee notes that member jurisdictions are pursuing a range of regulatory and supervisory measures to alleviate the financial stability impact of Covid-19. including measures targeting the provision of lending by banks to the real economy and facilitate banks' ability to absorb losses in an orderly manner.  The Committee notes that supervisory authorities also have additional flexibllity to undertake further measures if needed.  

In particular, the Basel III framework includes capital and liquidity buffers that are designed to be used in periods of stress. These include the capital conservation buffer and, by extension, the countercyclical capital buffer and buffers for systemically important banks. They also include banks' stock of high-quality liquid assets (HQLA). Using capital resources to support the real economy and absorb losses should take priority at present over discretionary distributions. HQLA stocks should be used to meet liquidity demands. Many supervisors are already encouraging banks to make use of these tools, which allow for flexibility in responding to the current circumstances. 

For credit unions, WOCCU is also urging national-level regulators to take note of this guidance and similarly allow for flexibility that will allow credit unions to serve their members during the crisis.  WOCCU's resource page can be viewed here.

A copy of the Basel Committee statement can be viewed here.

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Basel

World Council Urges Basel Committee to Consider Credit Union Difference in AML/CFT Guidance

The Basel Committee on Banking Supervision (Basel Committee) released a consultation requesting feedback on their Consultative Document: Introduction of Guidelines on Interaction and Cooperation Between Prudential and AML/CFT Supervision (Consultative Document). The Basel Committee’s goal is “[t[o] enhance the effectiveness of supervision on banks’ ML/FT risk management, the Committee proposes to provide further guidelines on interaction and cooperation between prudential supervision and anti-money laundering and countering financing of terrorism (AML/CFT) supervision.” World Council supported this objective, but urged the Basel Committee to not only consider the unique structure of credit unions when determining how to assess an institution’s money laundering and financing terrorism risks, but to give clear guidance to national-level regulators on how to appropriately and proportionately assess risk for credit unions. World Council further suggested that both prudential and AML/CFT supervisors outline a coordinated proportional approach to the enforcement, management, and assessment of credit unions based on their unique organization structure, as well as consideration for privacy concerns surrounding information sharing with supervisors, and confidentiality concerns with observers that may participate in colleges or other attendees participating on an ad hoc basis. WOCCU’s response to the Consultative Document can be found here.

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Basel, Comment Letter

Basel Committee Finalizes First Non-Draft Version of the Consolidated Basel Framework

In response to feedback received to the consultation regarding proposed changes to the consolidated Basel framework, the Basel Committee on Banking Supervision (Basel Committee) published a finalized version of the framework available in a new section of their website found here. The Basel Framework includes 14 standards divided into chapters based on definitive topics. The framework also addresses inconsistencies and ambiguities found in the draft version of the Basel requirements, which prompted the Basel Committee’s consultation that the current version of the framework now acknowledges. An overview of the Basel Framework can be found here; and the full text of the “Launch of the consolidated Basel Framework” can be found here. WOCCU notes that the final Consolidated Basel Framework does make some technical changes, however, the substantive framework as adopted remains intact.  Notably, the standard includes the WOCCU advocated direction on proportionality for national-level regulators.

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Basel

Basel Committee Reinforces the Need for Proportionality

The Basel Committee on Banking Supervision (Basel Committee) and the Basel Consultative Group (BCG) issued a joint statement supporting the use of proportionality in implementing the Basel Framework.  WOCCU applauds this joint statement as it has been urging further guidance directing national-level authorities to tailor Basel standards to the size, complexity and risk of a credit union or other community-based mutual depository institutions.  National-level regulators often tend to use the highest standard which often times are not appropriate or are excessive for credit unions.  This joint statement reinforces the need to use the built-in proportionality contained in the Framework and not use the Basel Framework as a floor.    

A copy of the joint statement can be viewed here

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Basel

Basel Committee on Banking Supervision Publishes Guidelines on AML/CFT Supervision

The Basel Committee on Banking Supervision (BCBS) has published their consultation, Introduction of Guidelines on Interaction and Cooperation Between Prudential and AML/CFT Supervision, in order to amend their previously published guidelines entitled, Sound Management of Risks Related to Money Laundering and Financing Terrorism. The guideline aims to outline methods to implement mechanisms that will facilitate cooperation between prudential and AML/CFT supervisors, including: recommendations and principles for information exchange on authorization procedures of banks, on-going supervision, and enforcement actions. “The proposed changes to the Sound management of risks related to money laundering and financing of terrorism include a new provision in "The role of supervisors" section that recommends establishing an effective cooperative system and a supplementing annex with specific recommendations and descriptive examples to facilitate supervisory cooperation.”

WOCCU is analyzing this proposal to ensure that the role of credit unions is adequately contemplated in the guidelines and that appropriate direction to national-level regulators to consider proportionality when implementing the guidelines is provided.  BCBS is accepting comments on the consultation until February 6, 2020; the document can be found here.

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Basel

Basel Proportionality Study under Pillar 2 Approach to Oversight of Internationally Active Banks

In July 2019, the Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a study of the application of proportionality under Pillar 2 of the Basel framework. Sixteen jurisdictions were surveyed to examine their application of proportionality and how they implemented Pillar 2 principles. FSI stated that the key aim of the survey was, "to determine whether and, and if so, how supervisory authorities apply proportionality in tailoring risk management expectations and supervisory practices according to the size, complexity and risk profile of regulated entities."

The Basel Committee on Banking Supervision created a three pillar approach to the oversight of international banks, designating Pillar 1 to outline risk-based capital (RBC) rules, which are subject to supervisory review pursuant to Pillar 2 regulatory requirements and disclosure requirements set forth in Pillar 3. Pillar 2 requires an assessment of risk profile through a cumulative set of risk management requirements coupled with risk-based supervision (RBS). 

FSI's "Proportionality Under Pillar 2 of the Basel Framework", can be found here

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Bank of International Settlements, Basel

WOCCU Urges Further Proportionality Guidance for Basel Framework

WOCCU urged the Basel Committee on Banking Supervision (Basel Committee) to include clearer guidance on the factors appropriate for national-level regulators to consider when developing proportionate approaches when implementing the Basel Framework. 

WOCCU noted that national-level supervisors often view the framework as a floor and either adopt the standard outright or even exceed the standard without proportionally tailoring the regulation to the size, complexity and risk of credit unions.  As such, stronger guidance that exceeds the clear statements on proportionality already included in the Basel framework are necessary.

The comments came as part of the consultation by the Basel Committee on is Consolidated Basel Framework which is designed to clearly and comprehensively set out the policy contained in the numerous published Basel standards adopted since the financial crisis.

A copy of the letter can be viewed here.

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Basel, Comment Letter

Basel Seeks to Rein in “Window-Dressing” by Big Banks

The Basel Committee has finalised this disclosure requirement to address the issue of “window dressing” by big banks whereby they reduce their balance sheets for end-quarter reporting and end-year disclousure purposes.  This practice leads to disruptions in the lending market and possible misleading information to investors. 

WOCCU commented on this proposal noting that credit unions are cooperative depository institutions that are not publicly traded, rarely operate on a cross-border basis and do not typically engage in the “window dressing” behavior addressed by the proposal.  In fact, because members of credit unions are physical-person members and legal-person members (which are usually small and medium-enterprises), they often increase their deposits at the end of each quarter, driving their leverage ratios down for end-quarter or end-year reporting.

The final standard will likely not be applicable to most credit unions but apply to internationally-active banks and will require disclosure of quarter-end values and on average of daily values over the quarter as part of their Pillar 3 requirements, in addition to disclosure of the total leverage exposure and the leverage ratio calculated using an averaged value of securities financing transaction assets.

A copy of the standard can be viewed here.

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Basel

WOCCU Recommended Approach Included in Finalized Basel Standard on Client Cleared Derivatives

As urged by WOCCU, the Basel Committee revised the leverage ratio treatment of client cleared derivatives to generally align it with the standardized approach measuring counterparty credit risk exposures (SA-CCR) as used for risk-based capital requirements.

WOCCU encouraged this approach to the leverage ratio in order to help preserve community-based financial institutions’ access to interest-rate derivatives in order to hedge interest rate risk.

Continued access for credit unions and other community based-depository institutions to fair and affordable interest rate swaps and caps promotes safety and soundness by helping community-based institutions hedge interest rate risks related to fixed-rate mortgage loans held in portfolio and similar fixed-rate investments.

WOCCU continues to have concerns that the SA-CCR may itself have capital requirements for banks involved in client clearing of derivatives that are too high for credit unions and other community-based financial institutions to be able to maintain access to interest rate derivatives at fair rates and will continue to monitor this situation.

The revised standard can be viewed here.

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Basel

WOCCU Calls for Further Proportionality Guidance for Credit Unions

Following a meeting by representatives of the credit union industry, the World Council of Credit Unions wrote to the Basel Committee on Banking Supervision (Basel Committee) to ask for further guidance to achieve the goal of better proportionality in regulation for credit unions.

In its letter, WOCCU urged additional guidance in the form of a set of high-level principles or weighing-factors on when less complex regulatory approaches can be warranted.  WOCCU noted that without additional guidance, many national-level policymakers continue to feel obligated to apply Basel III and other Basel Committee standards to non-complex, purely domestic deposit-taking institutions such as credit unions.  This notwithstanding that the Basel framework is intended only for internationally active banks and the expensive compliance standards are not warranted for credit unions. 

This letter followed an effort led by WOCCU making the case for proportionality to the Basel Committee last week with several representatives of the credit union industry including Canadian Credit Union Association (CCUA) President & CEO Martha Durdin, Customer Owned Banking Association (COBA) President & CEO Mike Lawrence and Credit Union National Association (CUNA) Chief Advocacy Officer Ryan Donovan.

A copy of the letter can be viewed here.

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Basel, Comment Letter

WOCCU Urges Basel Committee to Provide Flexibility with Leverage Ratio Disclosures

World Council urged the Basel Committee on Banking Supervision (Committee) to make the use of daily averages in disclosures optional for non-complex depository institutions such as credit unions and other community-based mutual depository institutions that follow standardized risk-based capital rules. 

The Committee is seeking input in its consultative document Revisions to Leverage Ratio Disclosure Requirements and is seeking to address the issue of “window dressing” that occurs with internationally active, publicly traded banks reduce their balance sheets for end-quarter and end-year disclosure purposes that have macroeconimic effects and can provide misleading information to investors. 

WOCCU notes that credit union do not typically engage in this “window dressing” behavior and thus the disclosures may result in disproportionate reporting burdens on credit unions.  WOCCU did urge the ability to have the option of using daily averages for reporting purposes.

A copy of the comment letter can be viewed here.

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Basel, Comment Letter

Basel Committee Completes Review of Principles for Sound Liquidity Risk Management and Supervision.

The Basel Committee on Banking Supervision (Committee) completed its review of the 2008 Principles for sound liquidity risk management and supervision without making any changes and confirming that  the principles remain fit for their purpose.  This means that there are no new regulatory burdens for credit unions related to liquidity standards under Basel standards.  This is consistent with WOCCU's advocacy urging the Committee to limit compliance burdens for community-based depository institutions.

The Committee advised continued vigilance of liquidity risks in financial markets noting that significant developments in financial markets since the publication of the Principles that can cave bearing on liquidity.  These include the following:

  1. Digitisation of finance and payment systems and the broader growth of financial technology;
  2. A greater use of central clearing of derivatives and margining; and
  3. The increasing risk and magnitude of cyber-attacks.

The Committee noted the importance of financial institutions establishing a robust liquidity risk management framework and urged continued adherence to the broader liquidity risk management considerations set out in the Principles.

The press release can be viewed here.

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Basel

WOCCU Urges Basel Committee to Preserve Access for Credit Unions to Interest-Rate Derivatives

WOCCU urged the Basel Committee on Banking Supervision (Basel Committee) to preserve community-based financial institutions’ access to interest-rate derivatives in order to hedge interest rate by adopting revisions to the leverage ratio that utilizes the standardized approach to counterparty credit risk (SA-CCR) for a banks’ leverage ratio capital requirements with respect to client cleared derivatives. 

WOCCU notes that unless such revisions are made, smaller users of interest rate swaps and caps may no longer be able to access interest rate derivatives at fair rates, or at all.  This access is important as it helps promote safety and soundness by helping credit unions hedge interest rate risks related various items that may be in their portfolios or similar fixed-rate investments.

These comments were filed as part of the Basel Committee’s Consultative Document:  Leverage Ratio Treatment of Client Cleared Derivatives and a copy of WOCCU’s letter can be viewed here.

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Basel, Comment Letter

Basel Committee Reduces Disclosure Burdens as Urged by World Council

The Basel Committee on Banking Supervision (Basel Committee) has exempted credit unions and other community-based depository institutions from many aspects of its disclosure rules and has made other disclosure requirements optional at the national-level, as World Council of Credit Unions (World Council) urged in comments filed earlier this year. The Committee issued the new disclosure rules, which are part of the Basel III international risk-based capital and liquidity standard, on December 12th.

Under the new rules virtually all community-based depository institutions will be exempt from the disclosure standard’s requirement to report historical operational losses. Many other disclosure requirements will be limited to institutions that use internal models to calculate capital levels or are parties to derivatives transactions, which de facto exempts most community-based depository institutions from these paperwork burdens.

In addition, it will be up to national-level regulators to decide whether to require depository institutions to issue disclosures on capital distribution constraints and on exposures to problem assets under expected credit loss accounting standards like International Financial Reporting Standard 9 (IFRS 9) and United States generally accepted accounting principles’ Current Expected Credit Losses (CECL).  

“We commend the Basel Committee for establishing proportional reporting thresholds and increasing national discretion over disclosures requirements, which should help reduce the regulatory burden spillover that rules for internationally active banks often have on community-based institutions like credit unions and other mutual deposit-taking institutions,” said Michael Edwards, World Council’s senior vice president and general counsel. 

The new disclosure framework, which is formally named Pillar 3 disclosure requirements - updated framework, is scheduled to take effect in 2020 for disclosures on asset encumbrance, capital distribution constraints and exposures to problem assets, with the rest of the framework taking effect when the Basel III standard is fully phased-in in 2022.

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Basel

Basel Committee Finalization of Stress Testing Principles Includes WOCCU Recommended Proportional Approach

The Basel Committee on Banking Supervision (Committee) issued its Stress Testing Principles including WOCCU recommended approach of implementation on a proportionate basis, depending on the size, complexity and risk profile of the institution for which the authority is responsible.  WOCCU members have often reported “gold-plating” and excess supervision involving stress testing.  The inclusion of the proportionality language, together with the WOCCU recommended direction to consider that the resources of the organizational structure are adequate given complexity of the exercises, should provide regulatory relief for credit unions from excessive supervisory requirements.

A copy of the Committee’s Stress Testing Principles can be viewed here.

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Basel

WOCCU Urges Continued Credit Union Access to Central Clearing of OTC Derivatives.

WOCCU made numerous recommendations that will allow credit unions to continue to have access to central clearing of over-the-counter derivatives.  In particular WOCCU urged a reduction in Basel III’s capital requirements for issuers and clearers of interest-rate swaps and caps to help better ensure continued access to interest rate derivatives for credit unions.  Without changes to these rules, the banks’ cost of capital for issuing or clearing interest rate derivatives may result in the banks dropping credit unions and other smaller derivatives users as clients.

The comments were filed in response to the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructure (CPMI) and the International Organization of Securities Commissions’ (together “the Committees”) Consultative Document: Incentives to centreally clear over-the-counter (OTC) derivatives.

A copy of the letter can be viewed here.

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Basel, Comment Letter, Financial Stability Board

Basel Adopts WOCCU Recommended Approach in Pillar 3 Disclosure Requirements

WOCCU’s recommended approach of limiting application of the Total Loss-Absorbing Capacity (TLAC) requirements at resolution group level to internationally active banks or global systemically important banks (G-SIBs) was adopted by The Basel Committee on Banking Supervision (Committee) today in its technical amendment on additional Pillar 3 disclosures requirements.  These requirements are for those jurisdictions implementing an expected credit loss (ECL) accounting model as well as for those adopting transitional arrangements for the regulatory treatment of accounting treatment.   

WOCCU filed its comment letter earlier this year urging this approach noting that such an approach would be an appropriate proportional regulatory approach vis-à-vis reporting compliance burdens for credit unions. 

A copy of the Committee’s technical amendment on additional Pillar 3 disclosure requirements can be viewed here.

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Basel