Basel III is a set of international standards developed by the Basel Committee on Banking Supervision (BCBS) who produced a framework of measures to strengthen the supervision and risk management of banks. Basel III will impact banks engaged in securities financing activity as in most instances they will now need to allocate more capital to support these activities. Specific impacts on the securities financing industry can vary depending on jurisdiction.
ISLA’s latest publication entitled Prudential Banking Rules: Explanatory Note, will provide a high-level overview of the framework and its impact to the securities financing market, including possible ways to address the upcoming challenges.
Table of Contents
- Overview of the Basel Framework
- History
- Aims & Objectives
- Scope
- Basel III
- The Final Basel III Reforms
- Key Terms & Definitions 6 Calculation of Capital Requirements under the Output Floor
- Challenges for the Securities Finance Industry
- Credit Risk RWAs under the Output Floor
- Minimum Haircuts for Securities Financing Transactions
- Addressing the Challenge