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Home Archive for category "Basel III – US" (Page 5)
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Federal Reserve Makes Technical Revisions to Market Risk Capital Rule and U.S. Basel III

Today, the Federal Reserve issued a final rule that makes technical changes to the market risk capital rule to align it with the U.S. Basel III capital framework adopted by the Federal Reserve earlier this year.

The market risk capital rule is used by banking organizations with significant trading activities to calculate regulatory capital requirements for market risk.  The technical changes to the rule reflect modifications by the Organization for Economic Cooperation and Development regarding country risk classifications.  The revisions also clarify the criteria for determining whether underlying assets are delinquent for certain securitization positions in the trading book.  …  Read More

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Blackline of U.S. Liquidity Coverage Ratio Proposal: Federal Register Version vs. Draft Version

Today, the Office of the Federal Register released for public inspection the version of the U.S. liquidity coverage ratio (LCR) proposal that will be published in the Federal Register on November 29, 2013.  We have prepared a blackline of the rule text in the Federal Register version against the rule text in the Federal Reserve’s October 24 draft version of the U.S. LCR proposal.

A notable technical correction contained in the Federal Register version relates to the eligibility of a sovereign entity, U.S.…  Read More

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Davis Polk’s U.S. Basel III Guide for Community Banks

U.S. Basel III is the most complete overhaul of U.S. bank capital standards in nearly a quarter of a century. It comprehensively revises the regulatory capital framework for the entire U.S. banking sector and will have significant implications for community banks from a business, operations, M&A and regulatory compliance perspective. This article provides an overview of the key aspects of U.S. Basel III for community banks.  A version of this article was published in DirectorCorps, Bank Director’s educational program for directors of community banks.…  Read More

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U.S. Basel III Liquidity Coverage Ratio Proposal: Visual Memorandum

The U.S. banking agencies have issued a proposal to implement the Basel III liquidity coverage ratio (LCR) in the United States. The LCR requires large banking organizations to maintain a minimum amount of liquid assets to withstand a 30-day standardized supervisory liquidity stress scenario. The U.S. LCR proposal is more stringent than the Basel Committee’s LCR framework in several significant respects.

Davis Polk’s visual memorandum uses diagrams, flowcharts, timelines, examples and comparison tables to illustrate key aspects of the U.S. LCR proposal.…  Read More

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Advanced Approaches Capital Rules: Federal Reserve Issues Guidance for Implementing the Supervisory Formula Approach for Securitization Exposures

The Federal Reserve’s Basel Coordination Committee has issued guidance regarding supervisory expectations for determining the capital requirements on the underlying exposures (KIRB) input to the Supervisory Formula Approach (SFA) for securitization exposures and the flexibility afforded to advanced approaches banking organizations when dealing with data limitations.  Federal Reserve and OCC staff worked together on the development of this guidance.

Background:  The advanced approaches capital rules, originally adopted by the U.S. banking agencies in 2007, apply to the largest and most internationally active U.S.…  Read More

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Revised Tier 2 Eligibility Guidance in Federal Register Version of U.S. Basel III Final Rule

Today, the Federal Reserve’s and OCC’s U.S. Basel III final rule was published in the Federal Register.  There are a number of substantive, technical and stylistic differences between the Federal Register version and the July 2013 draft version of the U.S. Basel III final rule.  Among other things, the Federal Reserve and OCC clarified in the preamble to the Federal Register version that “subordinated debt instruments that qualify as tier 2 capital must be subordinated to general creditors, which generally means senior indebtedness, excluding trade creditors.” (emphasis added).…  Read More

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