Basel III Progress Report: Some Jurisdictions' Banks Struggling to Adjust IT Systems to Meet Requirements

The report, which is the seventh of its kind and looks at the implementation progress of member jurisdictions for Basel III requirements, was a product of the Committee's Regulatory Consistency Assessment Program. The program, according to the report, monitors progress adopting Basel III standards; assesses constancy among national and regional banking regulations with Basel III standards; and analyzes outcomes from the regulations.

The Committee found key progress has been made around risk-based capital standards and the Liquidity Coverage Ratio (LCR). However, the report indicated some jurisdictions were having trouble meeting the deadline for five requirements.

Margin requirements for non-centrally cleared derivatives, the deadline for which is September 2016, and the revised Pillar 3 framework, which comes into play at the end of 2016 and is regarding disclosure agreements for big banks, were both noted. A standardized way to measure counterparty credit risk, capital requirements for central counterparty (CCP) exposures and capital requirements for equity investments in funds, all which have January 2017 implementation deadlines, were also listed.

The report notes that the challenges some jurisdictions were facing in meeting deadlines were related to processes for rulemaking at the local level and banks "difficulties in adjusting their information systems to meet and report on the new requirements," according to the report.

Specific jurisdictions having difficulty meeting the deadlines were not named.
Some jurisdictions inability to meet implementation deadlines puts added pressure on those that were able to meet the requirements in time, the report says.

"Since the publication of these principles in 2013, banks have made noticeable gains, particularly in establishing or strengthening banks' internal governance frameworks, and, in general, improving their risk data aggregation and risk reporting capabilities," the report notes. "However, as highlighted in the third annual progress report on banks' adoption of these principles that was published by the Committee in December 2015, there are still areas where banks fall short of full implementation. This is especially the case with the timely completion of the necessary large-scale data architecture and IT infrastructure projects. Significant gaps were also identified in terms of data accuracy and adaptability. Additional work needs to be done to meet the intent of the principles in these areas."