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Wolters Kluwer: 2017 regulatory predictions NEWS
bolstering their systems to take into account a plethora of new regulations, it’s worth taking some time to reflect on what the important developments are likely to be.
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Arguably 2017 will be the year where many of the prudential policy measures will start to become much more that ideas on paper. There has been progress throughout the year on items such as Minimum Market Risk Requirements/FTRB, Standardised Approach to Counterparty Credit Risk, Interest Rate Risk in the Banking Book, and although none have been implemented we can expect firms and regulators globally to spend significant time and energy working on these items in the year ahead. Savvy banks will do well to develop their technology to take this all into account. And the particularly switched on firms will be the ones who adopt an integrated approach to compliance and regulatory reporting.
We can also expect new items to be put on the table with progress expected on the new standardised approach to credit risk, reducing variation in credit risk weighted assets, a new standardised measure approach in operational risk, an output floor removing the existing Basel I floor and revisions to the leverage ratio. These measures will impact the way models are used in the context of regulatory reporting and in many cases altering significantly the current regulatory incentives. We can also expect that there will be opportunities for new ways of working to be considered. For example, with an increased scope to consider the role on insurance in the operational risk frame work.
Within Europe we will be discussing the impact of CRD V, which details how this area will address many of the changes mentioned above. The clarity this will provide is very welcome, but will not yet provide those implementing with a complete set of answers.
Meanwhile, macroprudential regulation is currently being reviewed and assessed by the regulatory bodies. We can expect to see suggestions for refinement and improvement throughout 2017 as regulators draw on the experiences of using these tools. We have already seen suggestions that
s banks look to 2017, with an eye on
these tools be used on the non-banking sector as well as banks. We will also see continued progress on Too-Big-To Fail, with measures tightening the rules around Total Loss Absorbing Capital continuing to be a focus.
On top of these measures, the change in the political environment may result in market disruption. With firms considering the economics of their activity in light of the changing regulatory economic and political outlook, I for one expect 2017 to be a particularly interesting year for anyone involved in the regulatory world and the related technology required to meet the challenges ahead.
Selwyn Blair-Ford, Head of Global Regulatory Policy, Financial Services, Wolters Kluwer
www.ibsintelligence.com © IBS Intelligence 2017
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