Basel Committee Proposes Revisions to Leverage Ratio Disclosure Requirements

The Basel Committee on Banking Supervision (the "Committee") proposed revisions to leverage ratio Pillar 3 disclosure requirements. Pillar 3 seeks to foster market discipline through regulatory disclosure requirements.

In a consultative document, the Committee explained that the Basel III leverage ratio standard consists of a three percent minimum level that banks with which must comply at all times, and is "a buffer for global systemically important banks and a set of public disclosure requirements." For the purpose of disclosure requirements, banks must report the leverage ratio on a quarter-end basis or report a measure based on averaging (i.e., by "using an average of exposure amounts based on daily or month-end values").

With regard to the proposed revisions, the Committee proposed that banks be required to include in their Pillar 3 disclosures - in addition to the current requirements - the amount of each exposure calculated based on an average of daily values throughout the quarter:

• securities financing transaction assets;
• replacement cost of derivative exposures; and
• central bank reserves that are in on-balance sheet exposures.

The Committee is seeking comments from the public on all aspects of the consultative document by March 13, 2019.