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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.