On 26 January 2021, the Basel Committee for Banking Supervision (BCBS) published a consultation with regards to two technical amendments to the standards on minimum haircut floors for securities financing transactions (SFTs). The technical amendments seek to address an interpretative issue relating to collateral upgrade transactions, and to correct for a misstatement of the formula used to calculate haircut floors for netting sets of SFTs.
On 16 March 2021, the European Banking Authority (EBA) also announced that it will change the Basel III monitoring exercise from a voluntary nature to a mandatory requirement by December 2021, to ensure wider jurisdictions are following the standards, and thus more credit institutions will be required to comply.
ISLA, jointly with ICMA, have submitted a response to the BCBS consultation, and although the memberships approved the technical amendments proposed, they have taken this opportunity to advocate more broadly around the scope of the new rules, requesting an exclusion for securities lending activity from the standards outlined in CRE56.
Further discussions around the implementation of the Basel Framework are covered within ISLA’s Regulatory Steering forum. To join the group and be part of the discussion, please register here.