On March 11, 2016, the Basel Committee on Banking Supervision launched a proposed consolidated and enhanced framework for Pillar 3 disclosures under Basel III. The Basel Committee announced in June 2014 that it was undertaking a review of Pillar 3. In January, it issued its revised Pillar 3 disclosure requirements, completing the first phase of the review. The Basel Committee is now consulting on the second phase of the review which includes:
- Enhancements to the revised Pillar 3 framework, including: (i) key regulatory metrics to provide an overview of a bank’s prudential position; (ii) proposals that banks disclose hypothetical risk-weighted assets calculated according to the standardized approaches for market risk, counterparty credit risk and the securitization framework, which requirements would be subject to finalization of the ongoing review of the standardized approach and the capital floor (a second consultation paper for credit risk was published on December 10, 2015); and (iii) a new disclosure requirement for prudent valuation adjustments.
- Further revisions to the framework arising from recent developments, including: (i) proposed disclosure requirements arising from the total loss-absorbing capacity regime for global systemically important banks; (ii) proposed revisions to operational risk (about which the Basel Committee issued a separate consultation paper on March 4, 2016); and (iii) the revised standard on market risk (which was issued on January 14, 2016).
- Consolidation of all Basel Committee disclosure requirements into the Pillar 3 framework which will include existing and prospective disclosure requirements.
Responses to the consultation are due by June 10, 2016.
The consultation paper on Pillar 3 is available at: http://www.bis.org/bcbs/publ/d356.pdf.
The second consultation paper on credit risk is available at: http://www.bis.org/bcbs/publ/d347.pdf.
The consultation paper on operational risk is available at: http://www.bis.org/bcbs/publ/d355.pdf.
The revised standards for market risk are available at: http://www.bis.org/bcbs/publ/d352.pdf.
The TLAC term sheet is available at: http://www.fsb.org/wp-content/uploads/TLAC-Principles-and-Term-Sheet-for-publicationfinal.pdf.