IIF board express concerns over different time schedules for implementation

Different schedules for implementing the Basel Accord will present complex issues for firms operating on both sides of the Atlantic, according to the International Institute of Finance (IIF). The main problem for many firms will be operating under two different systems.

Other issues range from the decisions on the regulatory capital levels that the Basel Committee will finally determine and home-host and cross-border jurisdictional issues. The IIF stressed that these issues need to be addressed as soon as possible to ensure proper implementation. Referring to a recent meeting with regulators, Cees Maas, vice-chairman and treasurer of the IIF board, said: “Our concerns are well understood by the regulators. It was well recognised that the uncertainty over implementation timing threatens the overall momentum in resolving numerous outstanding technical issues relating to the Accord.”

The IIF, the accounting task force of the Basel committee and the international accounting standards board, recently met to discuss developing approaches that would allow for provisioning methodology acceptable to banks, auditors and regulators, simplifying current hedge accounting rules and the increasing likelihood that the US will accept International Financial Reporting Standards (IFRS) without the need for costly reconciliations that are currently imposed by the Securities and Exchange Commission (SEC). Further meetings are scheduled for later this year.

In his closing comments, Maas stated that the IIF’s work is just starting: “We need to strive to work together with the regulators to see that regulations are developed in such a way that they are able to keep pace with rapid changes in the market-place, recognise the global character of the financial services business and achieve accepted regulatory goals both effectively and efficiently.”

BaselAlert.com