Basel III Update

The Basel Committee has just published its sixteenth progress report on adoption of the Basel regulatory framework

In it, the committee sets out the adoption status of Basel III standards for each Basel Committee on Banking Supervision (BCBS) member jurisdiction as at the end-March 2019.

This is an update to the Committee’s previous progress reports, which have been published on a semiannual basis since October 2011. In 2012, the Committee started the Regulatory Consistency Assessment Programme (RCAP) to monitor progress in introducing domestic regulations, assessing their consistency and analysis in regulatory outcomes. As part of this program, the Committee periodically monitors the adoption of Basel standards. The monitoring initially focused on the Basel risk-based capital requirements, and has since expanded to cover all Basel standards. These include the finalised Basel III post-crisis reforms published by the Committee in December 2017, which will take effect from 1 January 2022 and which will be phased in over five years.

As of the end-March 2019, all 27 member jurisdictions have risk-based capital rules, Liquidity Coverage Ratio (LCR) regulations and capital conservation buffers in force.

Twenty-six member jurisdictions also have final rules in force for the countercyclical capital buffer and the domestic systemically important bank (D-SIB) requirement.

With regard to the global systemically important bank (G-SIB) requirements published in 2013, all members that are home jurisdictions to G-SIBs have final rules in force. The leverage ratio based on the existing (2014) exposure definition has been partly or fully implemented in 26 member jurisdictions.

Moreover, 26 member jurisdictions have issued draft or final rules for the Net Stable Funding Ratio (NSFR), and 21 member jurisdictions have issued final rules for the revised securitisation framework. Also, 26 member jurisdictions have issued draft or final rules for the standardised approach for measuring counterparty credit risk exposures (SA-CCR), and 24 member jurisdictions have issued draft or final rules for the capital requirements for bank exposures to central counterparties (CCPs).

You can access the full report, with detailed statuses for each member jurisdiction HERE.

Who is going to supervise fintech?

Will Financial Regulators Supervise Fintech?

From Legal Solutions Blog –

“Regulated financial companies, including those I follow (residential mortgage lenders) must keep records for government examinations and investigations. For mortgage companies, that means loan files and servicing records, but recordkeeping also applies to customer communications (e.g., complaints and resolutions), and communications with counterparties and vendors. Until recently, regulators didn’t focus on communication and recordkeeping technologies used by financial firms.

That changed this summer, when Senator Elizabeth Warren and the New York Department of Financial Services suspected big banks could evade oversight of communications passing through a messaging service of Symphony Communication Services. Symphony touted its platform’s “guaranteed data deletion” and end-to-end encryption. Warren and the NYDFS wanted to know if Symphony could help users circumvent compliance or make it harder for regulators to get messages. IMs have sometimes been used in enforcement actions and missing messages may suggest compliance or recordkeeping failures. (Deutsche Bank’s regulatory headaches following its discovery that some of its electronic chats weren’t archived were widely reported.)”

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FCA fine gives context for Natwest over-compliance

From FT Advisor Blog

“Earlier this year, we revealed that Royal Bank of Scotland lender Natwest was provoking adviser ire with new affordability tests that went well beyond the demands of the regulator under the Mortgage Market Review.

In particular, the bank was one of several cited for refusing a remortgage request for a couple who were downsizing their loan and thus reducing their borrowing, in the process disregarding the transitional rules the sector had fought for that were designed to prevent such perverse outcomes.”

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FDIC Clarifies Third-Party Payments Risks

From Bank Info Security

“The Federal Deposit Insurance Corp. this week removed its list of high-risk merchant categories from guidance and informational articles related to third-party payment processors.

The banking regulator says the clarification was made to eliminate confusion among smaller banking institutions, which had expressed concern about doing business with merchants associated with high-risk businesses, such as payday lenders and check-cashers.

Guidance and articles amended to reflect the clarification include the FDIC's 2008 Guidance on Payment Processor Relationships and the revision to that guidance issued in 2012; the FDIC Supervisory Approach to Payment Processing Relationships With Merchant Customers That Engage in Higher-Risk Activities; and an informational article, "Managing Risks in Third-Party Payment Processor Relationships," published in the summer 2011 edition of the FDIC's Supervisory Insights.”

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