WOCCU: Proportionality Recommendations in a.o. Cybersecurity Reporting and Stress Testing
Volume 7, Number 6
November 28, 2018
Cyber Lexicon Finalized with World Council-Recommended Clarifications
The Financial Stability Board (FSB) has finalized its Cyber Lexicon with clarifications urgedby World Council of Credit Unions (World Council) to help limit compliance burdens on credit unions and other community-based financial cooperatives. The FSB published the Cyber Lexicon to support the development of new international cybersecurity standards for financial institutions. In response to World Council’s comments, the FSB limited the scope of the lexicon to core terms only and clarified that cybersecurity reporting requirements should be appropriately tailored to reduce paperwork burdens. The lexicon will be presented at the G20 Leaders’ Summit in Buenos Aires scheduled for November 30th to December 1st.
Stress Testing Reg Burdens Made “Proportional” at World Council’s Urging
The Basel Committee on Banking Supervision (Basel Committee) has revised its Stress testing principles standard to reduce the regulatory burdens of stress testing on credit unions and other community-based financial cooperatives. World Council earlier this year urged the Basel Committee to adopt a more “proportional” approach to stress tests because of their high compliance costs. The Basel Committee agreed with World Council that stress testing in practice had become disproportionately burdensome on community-based institutions. The Committee’s updated stress testing standard will now require prudential supervisors to conduct stress tests that are proportionate to the size, complexity, resources and risk profile of the institution being stress tested.
Report and Proposal on Access to Derivatives Respond to World Council’s Concerns
The FSB, the Basel Committee, the Committee on Payments and Market Infrastructures(CPMI) and the International Organization of Securities Commissions (IOSCO) have issued a report on Incentives to centrally clear over-the-counter (OTC) derivatives that responds to World Council’s comments that smaller financial institutions may soon be shut out of the interest rate derivatives market unless revisions are made to the Basel III regulatory capital standard. The report incorporated World Council’s suggestion that the Basel III leverage ratio should be reworked because the high cost of Basel III for banks that clear derivatives transactions has made it harder for smaller financial institutions to purchase derivatives products. The Basel Committee concurrently issued a consultative document on the Leverage ratio treatment of client cleared derivatives that responds to World Council’s concerns by proposing to reduce Basel III’s derivatives clearing capital requirements so that credit unions and other community-based institutions can continue to have access to interest rate swaps and caps at fair rates.
World Council Meets with Trinidad and Tobago Government on IFRS 9 Implementation
Michael S. Edwards
Senior Vice President & General Counsel
World Council of Credit Unions (WOCCU)
99 M St., Washington, D.C. 20003-3799 USA
Office: +1-202-843-0702 medwards@woccu.org | www.woccu.org
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