The Basel Committee on Banking Supervision has issued Pillar 3 disclosure requirements – consolidated and enhanced framework. This standard represents the second phase of the Committee’s review of the Pillar 3 disclosure framework and builds on the revisions to the Pillar 3 disclosure published by the Committee in January 2015.
The Pillar 3 disclosure framework seeks to promote market discipline through regulatory disclosure requirements. The enhancements in the standard contain three main elements:
- Consolidation of all existing BCBS disclosure requirements into the Pillar 3 framework – These disclosure requirements cover the composition of capital, the leverage ratio, the Liquidity Coverage Ratio (LCR), the Net Stable Funding Ratio (NSFR), the indicators for determining globally systemically important banks (G-SIBs), the countercyclical capital buffer, interest rate risk in the banking book and remuneration.
- Two enhancements to the Pillar 3 framework – This standard introduces a “dashboard” of a bank’s key prudential metrics which will provide users of Pillar 3 data with an overview of a bank’s prudential position, and a new disclosure requirement for those banks which record prudent valuation adjustments (PVAs) to provide users with a granular breakdown of how a bank’s PVAs are calculated.
- Revisions and additions to the Pillar 3 standard arising from ongoing reforms to the regulatory policy framework – This standard includes new disclosure requirements in respect of the total loss-absorbing capacity (TLAC) regime for G-SIBs issued in November 2015, and revised disclosure requirements for market risk arising from the revised market risk framework published by the Committee in January 2016.
Note that this standard does not include disclosure requirements arising from the Committee’s ongoing finalisation of the Basel III reforms. Disclosure requirements agreed by the Committee following the issuance of this standard will be included within the scope of the third phase of the review of the Pillar 3 framework.
The standard incorporates feedback from Pillar 3 preparers and users collected during the public consultation conducted in March 2016. Clarifications have been made relating to the disclosure requirements, in particular those pertaining to TLAC.
The implementation date for each of the disclosure requirements is set out in the standard. In general, the implementation date for existing disclosure requirements consolidated under the standard will be end-2017. For disclosure requirements which are new and/or depend on the implementation of another policy framework, the implementation date has been aligned with the implementation date of that framework
