On June 10, 2016, The Institute of International Finance, the International Swaps and Derivatives Association and the Global Financial Markets Associations jointly issued an open letter to the Basel Committee on Banking Supervision. The letter outlines the collective views of the Associations on the Basel Committee's Consultative Document on Pillar 3 Disclosure Requirements which was published on March 11, 2016. The consultation was a second phase review of the proposed consolidated and enhanced framework for Pillar 3 disclosures under Basel III.
The letter states that while the Associations strongly endorse the goals of Pillar 3 to enhance market understanding of banks’ capital and risk profiles, they have a number of serious concerns in relation to the Basel Committee’s proposal. Such concerns relate to, among other things: (i) the quantity and granularity of information proposed to be disclosed; (ii) hypothetical disclosures, which should be reconsidered as they may be misunderstood and lead to misperceptions that would be damaging to banks and the credibility of the regulatory framework; (iii) a number of specific issues that would require attention to make Total Loss Absorbing Capacity disclosures useful and feasible; and (iv) the proposals for market risk and operational risk, which have been complex and difficult to analyze. The letter also covers other topics such as the problem of information overload and ways to streamline Pillar 3, including expanding the scope of signposting.
The letter is available at: https://www.iif.com/file/16241/download?token=XxnkIHy7.