The Office of the Superintendent of Financial Institutions (OSFI) on Monday published a discussion paper, Implementation of the Final Basel III Reforms in Canada, that details its plans for implementing the final set of reforms to the global capital adequacy requirements for banks, known as Basel III.
The final phase of reforms, which was released by the Basel Committee on Banking Supervision at the end of 2017, includes changes to the provisions dealing with credit risk and operational risk, and the leverage ratio, among other things.
Although the deadline for implementing these changes is still several years away, OSFI has already received questions from the industry on its plans.
As a result, the federal banking regulator has decided to start the consultation process early, “to allow for a more detailed dialogue on implementation issues as well as to finalize guidance as early as possible,” OSFI states in a letter to banks.
In addition to setting out OSFI’s initial plans for adopting the final Basel III reforms, the paper also poses a series of questions on specific issues, including areas where OSFI is proposing to deviate from the Basel requirements “to better fit the Canadian market,” the letter states.
OSFI supports the changes set out in the final Basel III reforms, but it is considering modifications to the final reforms for the Canadian market in areas such as the treatment of residential mortgages, the treatment of credit cards, and the transition period for the capital floor.
“OSFI is committed to the implementation of the final Basel III reforms in Canada,” says Carolyn Rogers, assistant superintendent, regulation sector, OSFI, in a news release.
“The discussion paper is a key part of our commitment to consult with the industry and ensure that our implementation is properly adapted to the Canadian market.”
Comments on the discussion paper are due by Oct. 19.