Basel Committee Agrees to Advance Several Ongoing Policy and Supervisory Initiatives
The Basel Committee (the "Committee") agreed to advance several ongoing policy and supervisory initiatives concerning, among other things, leverage ratios and FinTech developments.
At the June 19-20 Basel Committee on Banking Supervision meeting, the Committee agreed to:
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implement revised leverage ratio requirements, allowing margin received from a client to offset the exposure amounts of client-cleared derivatives;
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revise disclosure requirements to increase transparency;
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approve a report on "Pillar 2" supervisory review practices and approaches; and
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assess emerging risk management challenges posed by FinTech, such as the use of artificial intelligence and machine learning in financial services.
Additionally, the Committee reviewed:
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reports assessing the implementation of the Net Stable Funding Ratio and large exposures standards in Australia, Canada and India;
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its process for evaluating the impact of its post-crisis reforms; and
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a report on the regulatory and supervisory implications of open banking and application programming interfaces.
Several revisions will be published over the coming weeks.
Commentary
The Basel Statement was welcomed by CFTC Chairman J. Christopher Giancarlo, in particular that Basel "has agreed on a targeted and limited revision of the leverage ratio to allow margin received from a client to offset the exposure amounts of client-cleared derivatives." Mr. Giancarlo urged regulators to "expeditiously" implement the Basel standards once published. This appeal echoed recent calls from a group of four CFTC commissioners who urged U.S. banking regulators to take action on this matter.