Singapore’s banking regulator has told lenders it will delay the implementation of global rules designed to rein in trading risks by a year, Reuters reported.
The Monetary Authority of Singapore notified local banks of the delay to the so-called “fundamental review of the trading book,” or FRTB, in a letter last month that also flagged a number of other regulatory issues, Reuters said, citing two people briefed on the matter. A MAS spokesperson said the regulator is “committed to a full implementation” of Basel III reforms.
As part of banking industry reforms unveiled to prevent a repeat of the 2008 financial crisis, the Basel Committee on Banking Supervision issued in January 2016 minimum capital requirements for market risk. Known in the industry as the FRTB, the framework was to come into effect on Jan. 1, 2019.
However, various complexities and the need for technical clarifications have led some regulators to delay the FRTB as they try to align the structure with their individual jurisdictions. The Basel Committee doesn’t have enforcement powers, and is reliant on national regulators to install any changes.
“In determining the implementation timeline, MAS will consider factors such as the state of global implementation guidance, the industry’s readiness and implementation progress in other jurisdictions,” its spokesperson said in an email.
The Australian Prudential Regulation Authority told the country’s banks in March that a new FRTB standard probably won’t take effect until the beginning of 2021 at the earliest. Separately, the Hong Kong Monetary Authority advised the city’s lenders last month that the FRTB will be introduced no earlier than Jan. 1, 2020.
“In the past months a number of practical implementation questions have arisen given the high complexity of the new standards,” the HKMA said in its letter. “It is becoming increasingly challenging for jurisdictions to implement the new standards in accordance with the BCBS timeline.”
The delays come as Europe and the U.S. remain deadlocked over a revamp of the Basel III capital standards, with the EU pushing a softer rule than the U.S. Mark Carney, Bank of England governor and head of the Financial Stability Board, warned leaders of the Group of 20 countries this week that one of the biggest threats to improvements made to the financial system is “reform fatigue.”