The Basel Committee planned to follow-up its December 2010 "Basel III" framework documents with a further document setting out the final, revised Basel III leverage ratio framework. A new Consultative Document sets out the Basel Committee's proposed revised leverage ratio framework (which is designed to act as a non-risk based backstop to the minimum capital requirements), along with the public disclosure requirements that are intended to take effect from 1 January 2015. The Basel III leverage ratio is defined as the Capital Measure (Tier 1 Capital) divided by the Exposure Measure (the crucial sum of on-balance sheet exposures, derivative exposures, securities financing transaction exposures and other off-balance sheet exposures), which must give a minimum ratio of 3% during a "parallel run" period from 1 January 2013 to 1 January 2017. The Consultative Document sets out revisions that the Basel Committee has incorporated into the proposed framework, mainly to adjust the Exposure Measure to include a broader scope of consolidation for the inclusion of exposures in the Exposure Measure, clarification of the treatment of derivatives and related collateral, enhanced treatment of written credit derivatives, and enhanced treatment of Securities Financing Transactions (i.e. repos). A set of public disclosure requirements would require banks to make frequent, public disclosures about their Basel III leverage ratio, their Tier 1 capital level, their Exposure Measure and their end-of-quarter leverage ratios, in a set of disclosure documents developed by the Basel Committee, which comprise a summary comparison table and a common disclosure template, together with an explanatory table. Final adjustments to the leverage ratio will be made during the first half of 2017, with a view to migrating to Pillar 1 treatment (i.e. the requirement becomes part of the minimum requirements, rather than being part of supervisor's additional regulatory tools under Pillar 2) on 1 January 2018. Responses to the Consultative Document are requested by 20 September 2013.
In addition, the Basel Committee is consulting on a proposed disclosure framework for the Basel III Liquidity Coverage Ratio (LCR), that would require banks to adopt a common disclosure framework for the reporting of their liquidity positions from 1 January 2015 when the LCR phase-in begins.
Basel Committee Consultative Document (Leverage ratio framework)
Basel Committee Consultative Document (LCR disclosure standards)