Basel Panel Clarifies Pillar 3 Disclosure Requirements in New FAQ

The Basel Committee on Banking Supervision has issued frequently asked questions (FAQs) on disclosure requirements under the Third Basel Accord regulatory framework.

The committee has received a number of interpretation questions related to the January 2015 publication of the revised "Pillar 3" disclosure requirements.

The Third Basel Accord, or Basel III, sets out a global voluntary framework for regulation of capital adequacy, stress testing and market liquidity risk. Its three so-called pillars, or subject areas, are regulatory capital, supervisory review, and market disclosure.

The Pillar 3 FAQ addresses 46 questions and seeks to clarify issues including on credit risk mitigation techniques, exposures to central counterparties, details for the composition of collateral, securitisation exposures in the banking book, and comparison of VaR estimates with gains/losses.

To promote consistent global implementation of the requirements, the Basel Committee has agreed to periodically review FAQs and publish answers along with any technical elaboration of the standard and any interpretative guidance that may be necessary. The FAQs published correspond to the text set out in the standard.

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Bora Yagiz, FRM is a New York-based Regulatory Intelligence Expert for Thomson Reuters Regulatory Intelligence, specializing in risk. He is a certified Financial Risk Manager. Mr. Yagiz has held positions as a bank examiner for the Federal Reserve Bank of New York, as senior consultant with Ernst & Young and vice president at Morgan Stanley.

Reuters