Golden Copy: Basel III Accordion

In a column back in December, I argued that regulators still had to tie up a lot of loose ends in the Basel III regulation that were not adequately defined. An informative story this past week on our sister site Sell-Side Technology about a report by the Basel Committee on Banking Supervision (BCBS), the regulatory body that administers these risk capital standards, tells us that the compliance onus is back on industry firms, who have had trouble meeting requirements already in effect.

There are also some imminent deadlines that are of concern. The first of these hits this month: the margin requirements for non-centrally cleared derivatives. The second is the Pillar 3 framework for disclosures by big banks, which takes effect at the end of this year. More standards for counterparty credit risk and central counterparty exposure also kick in at the start of 2017.

Now, whether these upcoming rules are clear enough or not, firms must have adequate information systems and data management in place to follow whatever the rules require. It's hard to know which way the balance of responsibility tips when compliance with any particular regulation is lacking. In past columns, I've probably veered in both directions when analyzing and commenting on the state of affairs for different rules, depending on an assessment of the credibility of efforts made by either side – the regulators and the regulated.

On Basel III, it appears now that the scales have tipped toward the industry, since BCBS has set out specific, periodic goalposts for multiple aspects of capital adequacy compliance. That's the opposite of the tack I took in late 2015, but the findings of the BCBS report covered in this story have to shift even a neutral observer's assessment.