Basel Committee Consults on Capitalisation of Bank Exposures to CCPs

The Basel Committee has issued a consultative paper on the capitalisation of bank exposures to central counterparties (CCPs), in particular those related to the capitalisation of default fund exposures. The committee is engaging in this consultation to give affected parties and interested stakeholders an opportunity to comment on the proposed rules set out in the publication.

Mark White, chair of the Basel Committee’s risk management and modelling group and assistant superintendent of Canada’s Office of the Superintendent of Financial Institutions, said : “The committee’s intent is to provide incentives for banks to increase the use of CCPs. This is balanced, however, by the need to ensure that the risk arising from banks’ exposures to CCPs is adequately capitalised.”

The committee will also conduct an impact study, which will help in finalising and calibrating the CCP proposals. The impact study will be conducted in co-ordination with the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organisation of Securities Commissions (IOSCO). These organisations will communicate with and collect relevant data from the CCPs participating in the impact study. CPSS and IOSCO collectively set the standards for the supervision and oversight of financial market infrastructures – including CCPs – and are currently in the process of reviewing the standards.

The proposed rules for the capitalisation of bank exposures to CCPs will be refined, as necessary, after the completion of this consultation period and impact study. The rules will be finalised once the final CPSS-IOSCO standards are published during 2011. The committee expects the rules will be implemented in its member jurisdictions by January 2013.


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