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:
- implement revised leverage ratio requirements, allowing margin received from a client to offset the exposure amounts of client-cleared derivatives;
- revise disclosure requirements to increase transparency;
- approve a report on "Pillar 2" supervisory review practices and approaches; and
- 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:
- reports assessing the implementation of the Net Stable Funding Ratio and large exposures standards in Australia, Canada and India;
- its process for evaluating the impact of its post-crisis reforms; and
- 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 / Nihal Patel
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.
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