The Basel Committee is consulting on a proposal to incorporate the FSB policy framework for haircut floors for non-centrally cleared securities financing transactions (SFT) into the Basel III framework. The proposal is based on an FSB report on strengthening the oversight and regulation of shadow banking which recommended that haircut floors should be incorporated into Basel III capital requirements by the end of 2015 for non-centrally cleared SFTs by setting significantly higher capital requirements for transactions with haircuts traded below the haircut floors. The proposal aims to incentivise banks to set their collateral haircuts above the floors, rather than hold more capital. Consultation closes on 5 January 2016. (Source: Basel Consults on Haircut Floors)