The Basel Committee released its final text on the Basel III leverage ratio framework and disclosure requirements on 12 January 2014. At the European level, the Commission is currently undertaking action in regard to the leverage ratio. On 5 June 2014, the European Banking Authority (EBA) published its final draft Implementing Technical Standards (ITS) on disclosure for the leverage ratio under the Capital Requirement Regulation. After adoption by the European Commission, the ITS will be directly applicable across the EU. In the meantime, the European Commission has the opportunity to modify the calculation of the leverage ratio before its disclosure on 1 January 2015.
The EBF advised the relevant policy-makers on their inappropriate willingness to rush into completing the CRR leverage ratio definition as there are currently more than ten pages of industry FAQs to the Basel text from January 2014. The EBF therefore recommends that the delegated act is postponed until the Basel III leverage framework can be considered completely stabilised.
In addition, it was stressed that the provisions of the Basel Committee’s January 2014 exposure measure are still too strict regarding the treatment of Securities Financing Transactions (SFT) and derivatives, leading to an excessively inflated exposure measure. The EBF therefore recommends that the treatment of SFTs and derivatives in the Basel leverage ratio exposure measure of January 2014 is analysed more in depth, taking into account EBA studies on reported data before taking any further steps.
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