The Basel Committee on Banking Supervision has published revised disclosure requirements that finalize the so-called Pillar 3 framework, the committee announced Tuesday.
Pillar 3 of the Basel framework aims to promote discipline on bank management by bolstering the disclosure that they must make to investors, and the markets overall.
The demand for greater insight into banks’ risks is as part of regulators’ ongoing effort to enhance market discipline in response to the financial crisis.
The revised Pillar 3 framework sets disclosure standards regarding: banks’ risk-weighted assets; credit risk, operational risk, the leverage ratio and credit valuation adjustment (CVA) risk; and an overview of risk management and other prudential metrics. The revised framework sets out new disclosure requirements on asset encumbrance and constraints on capital distribution, when required by national regulators.
The Basel Committee launched a consultation on the requirements in February. The revised standards incorporate feedback that was received during the consultation, including revisions to streamline the CVA disclosure requirements.
The implementation deadline for the new requirements is Jan. 1, 2022.