The Basel III framework is a central element of the Basel Committee’s response to the global financial crisis. It aims to address a number of shortcomings in the pre-crisis regulatory framework and provides a foundation for a resilient banking system to avoid the build-up of systemic vulnerabilities.
The main objective of the latest revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets (RWA). The key (and most impactful) measure to address this is the Output floor which sets the minimum amount of capital a bank can draw from use of internal models-based approaches to 72.5% of the capital required under the standardised approach. The CRR3 proposals will also include significant changes to the Credit risk and Operational Risk framework, as well as implementing other reforms related to CVA risk and Market risk.
AFME is working closely with EU regulators as they seek to implement the final revisions to Basel III in the EU. We are engaging on behalf of our Members with the EU institutions as they seek to negotiate and finalise the implementation of Basel III as part of CRR3.Further information about our positions on the elements of the Basel III package can be found on this page.
Documents can be found here
Working Group: Regulatory Reporting.
Prudential Treatment of Crypto Asset
GFMA joined the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association, the International Securities Lending Association, the Bank Policy Institute, the International Capital Markets Association, and the Financial Services Forum in a joint trade association response to the Basel Committee on Banking Supervision’s second consult on the “Prudential Treatment of Crypto asset Exposures.
Working Group: AFME Prudential Treatment of Crypto Assets Task Force.
AFME’s on-going work on liquidity risk and associated treasury topics continues as on-going implementation considerations and technical discussions are augmented with legislative proposals on high impact areas of the NSFR and on outstanding fundamental aspects of the LCR. Current areas and topics of work include considerations around the long-term funding associated with repos and derivatives, inherent procyclicalities of the LCR measure and considerations surrounding the use of liquid asset buffers.
Medium term linkages with climate risk and changing monetary policy are likely to bring further opportunities for active collaboration in the policy setting process, while intra-day liquidity risk may also provide scope for further work.
Significant resource is assigned to providing specialist treasury members with the most appropriate bilateral and group for a in which to consult on potentially sensitive and complex aspects of the current and expected frameworks.
Working Group: Liquidity WG