What’s coming, and when


• The Basel Committee on Banking Supervision announced in mid-October that it will be delaying the release of the final version of the revised Basel Accord until the second quarter of 2004, while the body consults with the financial industry on various issues. However, the implementation deadline of January 2007 remains unchanged.

The UK

• The Financial Services Authority (FSA) published CP189 -- Report and first consultation on the implementation of the new Basel and EU capital adequacy standards in early July. The deadline for responses is November 14. The financial industry watchdog plans to produce draft rules and guidance for Basel implementation for the Prudential Sourcebook in 2004. Text for the BIA and STA approaches is expected in early 2004, and the AMA text is expected in September of that year.

• The FSA published Integrated prudential sourcebook -- Near-final text on prudential risks systems and controls at the end of October. The draft policies were contained in CP 97 (Integrated Prudential Sourcebook), CP128 (Liquidity risk in the Integrated Prudential Sourcebook), and CP142 (Operational risk systems and controls). The text is expected to be finalised by the FSA board in mid-2004 and implemented by December 31, 2004.

• The FSA plans to ask banks to apply for a waiver to adopt the advanced measurement or internal ratings-based approaches. More detail on the approval process for the advanced approaches will be published in early 2004 as a draft waiver pack.

• The FSA will be producing a series of ‘issues papers’ offering banks guidance on various aspects of operational risk under Basel II. The first paper is expected to cover the issue of appropriate threshold levels for loss data collection. No publication date has been set.

The European Union

• The EU Commission responses for the last draft of the capital adequacy directive (CAD) were due in on October 22. The final CAD is expected to be published shortly after the finalised Basel II document is released. The European Parliament is expected to have the first reading on the legislation in September 2004. It is possible the legislation will pass on the first reading, but in any case, it should be passed by the summer of 2005. However, sources in the EU parliament say that there will be delays, and a more realistic implementation deadline would be January 2008.

• The European Commission published Solvency II -- Reflections on the general outline of a framework directive and mandates for further technical work in mid-September.

• The EU Parliament is expected to publish a study of the impact of the Basel II proposals on small and medium-sized enterprises before the end of the year.

The US

• Regulators issued an advanced notice of proposed rulemaking (ANPR) in early July, along with draft supervisory op risk guidance. Comments were due by November 3. The notice of proposed rulemaking (NPR) is expected to be published in the first quarter of 2004. In addition, a US quantitative impact survey is expected in 2004. Further hearings are expected before year-end.

• The Securities and Exchange Commission (SEC) published a framework for capital adequacy for investment banks and broker dealers at the end of October. The framework is modelled very loosely on Basel II. Responses are due in on February 4, 2004. OpRisk

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