Basel ii Compliance Professionals Association (BCPA)
Welcome to the Basel ii Compliance Professionals Association (BCPA), the largest association of Basel ii Professionals in the world.
After the publication of the Basel Committee’s first round of proposals for revising the capital adequacy framework in June 1999, an extensive consultative process followed in all member countries, and the proposals were also circulated to supervisory authorities worldwide.
The Basel Committee subsequently released additional proposals for consultation in January 2001 and April 2003, and furthermore conducted three quantitative impact studies related to its proposals. As a result of these efforts, many valuable improvements had been made to the original proposals.
Basel 2 was the agreed framework for measuring capital adequacy, and the minimum standard to be achieved which the national supervisory authorities represented on the Basel Committee would propose for adoption in their respective countries.
This Framework and the standard it contained had been endorsed by the Central Bank Governors and Heads of Banking Supervision of the Group of Ten countries.
The Basel Committee expected its members to move forward with the appropriate adoption procedures in their respective countries. In a number of instances, these procedures would include additional impact assessments of the Committee’s Framework as well as further opportunities for comments by interested parties to be provided to national authorities.
The Basel Committee intended the Framework to be available for implementation as of year end 2006. However, the Committee believed that one further year of impact studies or parallel calculations would be needed for the most advanced approaches, and these therefore would be available for implementation as of year-end 2007.
The economic and financial crisis which began in 2007, led to the adoption of the Basel 3 framework.
Even before Lehman Brothers collapsed in September 2008, the need for a fundamental strengthening of the Basel II framework had become apparent.
The banking sector entered the financial crisis with too much leverage and inadequate liquidity buffers. These weaknesses were accompanied by poor governance and risk management, as well as inappropriate incentive structures.
The dangerous combination of these factors was demonstrated by the mispricing of credit and liquidity risks, and excess credit growth.
Responding to these risk factors, the Basel Committee issued the Principles for sound liquidity risk management and supervision in the same month that Lehman Brothers failed.
In July 2009, the Committee issued a further package of documents to strengthen the Basel II capital framework, notably with regard to the treatment of certain complex securitisation positions, off-balance sheet vehicles and trading book exposures.
These enhancements were part of a broader effort to strengthen the regulation and supervision of internationally active banks, in the light of weaknesses revealed by the financial market crisis. In September 2010, the Group of Governors and Heads of Supervision (GHOS) announced higher global minimum capital standards for commercial banks.
This followed an agreement reached in July regarding the overall design of the capital and liquidity reform package, now referred to as "Basel III". In November 2010, the new capital and liquidity standards were endorsed at the G20 Leaders' Summit in Seoul and subsequently agreed at the December 2010 Basel Committee meeting. The proposed standards were issued by the Committee in mid-December 2010 (and have been subsequently revised).
The December 2010 version were set out in two documents, the Basel III: International framework for liquidity risk measurement, standards and monitoring and Basel III: A global regulatory framework for more resilient banks and banking systems. The enhanced Basel framework revises and strengthens the three pillars established by Basel II, and extends it in several areas.
Most of the reforms were being phased in between 2013 and 2019:
- stricter requirements for the quality and quantity of regulatory capital, in particular reinforcing the central role of common equity
- an additional layer of common equity - the capital conservation buffer - that, when breached, restricts payouts to help meet the minimum common equity requirement
- a countercyclical capital buffer, which places restrictions on participation by banks in system-wide credit booms with the aim of reducing their losses in credit busts
- a leverage ratio - a minimum amount of loss-absorbing capital relative to all of a bank's assets and off-balance sheet exposures regardless of risk weighting
- liquidity requirements - a minimum liquidity ratio, the Liquidity Coverage Ratio (LCR), intended to provide enough cash to cover funding needs over a 30-day period of stress; and a longer-term ratio, the Net Stable Funding Ratio (NSFR), intended to address maturity mismatches over the entire balance sheet
- additional requirements for systemically important banks, including additional loss absorbency and strengthened arrangements for cross-border supervision and resolution
From 2011, the Committee turned its attention to improvements in the calculation of capital requirements. The risk-based capital requirements set out in the Basel II framework were expanded to cover:
- in 2012, capital requirements for banks' exposures to central counterparties (initially an interim approach, subsequently revised in 2014)
- in 2013, margin requirements for non-centrally cleared derivatives and capital requirements for banks' equity in funds
- in 2014, a standardised approach for measuring counterparty credit risk exposures, improving the previous methodologies for assessing the counterparty credit risk associated with derivatives transactions
- in 2014, a more robust framework for calculating capital requirements for securitisations, as well as the introduction of large exposure limits to constrain the maximum loss a bank could face in the event of a sudden failure of a counterparty
- in 2016, a revised market risk framework that followed a fundamental review of trading book capital requirements
- a consolidated and enhanced framework for disclosure requirements to reflect the development of the Basel standards
The Committee completed its Basel III post-crisis reforms in 2017, with the publication of new standards for the calculation of capital requirements for credit risk, credit valuation adjustment risk and operational risk.
The final reforms also include a revised leverage ratio, a leverage ratio buffer for global systemically important banks and an output floor, based on the revised standardised approaches, which limits the extent to which banks can use internal models to reduce risk-based capital requirements.
These final reforms address shortcomings of the pre-crisis regulatory framework and provide a regulatory foundation for a resilient banking system that supports the real economy.
A key objective of the revisions was to reduce excessive variability of risk-weighted assets (RWA). At the peak of the global financial crisis, a wide range of stakeholders lost faith in banks' reported risk-weighted capital ratios.
The Committee's own empirical analyses also highlighted a worrying degree of variability in banks' calculation of RWA. The revisions to the regulatory framework will help restore credibility in the calculation of RWA by enhancing the robustness and risk sensitivity of the standardised approaches for credit risk and operational risk, constraining internally modelled approaches and complementing the risk-based framework with a revised leverage ratio and output floor.
You may visit the Basel iii Compliance Professionals Association (BiiiCPA) to learn more about the Basel 3 framework.
We invite you to connect with the global community of experts working for the implementation of the Basel III framework, to gain insight into the G20 efforts to regulate the global financial system, to explore new career avenues, and most of all, to acquire lifelong skills.
Join us. Stay current. Read our monthly newsletter with news, alerts, challenges, and opportunities. Get certified and provide independent evidence that you are an expert.
Basel III is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision, in response to the financial crisis of 2007. Financial organizations compete to attract professionals who can provide evidence that they are qualified.
You can explore what we offer to our members:
Become a standard, premium or lifetime member. To learn more, you may visit: https://www.basel-iii-association.com/How_to_become_member.htm
2. Monthly Updates
Read our monthly newsletter at the Reading Room of the association: https://www.basel-iii-association.com/Reading_Room.html
3. Training and Certification
The association offers distance learning and online certification programs in all countries, and in-house instructor-led training in companies and organizations in many countries.
A. Distance learning and online certification programs.
A1. Certified Basel iii Professional (CBiiiPro), distance learning and online certification program. To learn more, you may visit: https://www.basel-iii-association.com/Basel_III_Distance_Learning_Online_Certification.html
A2. Certified Pillar 3 Expert - Basel 3 (CP3E-B3), distance learning and online certification program. To learn more, you may visit: https://www.basel-iii-association.com/CP3E_B3_Distance_Learning_Online_Certification.html
A3. Certified Stress Testing Expert - Basel 3 (CSTE-B3), distance learning and online certification program. To learn more, you may visit: https://www.basel-iii-association.com/CSTE_B3_Distance_Learning_Online_Certification.html
A4. Capital Requirements Directive IV / Capital Requirements Regulation Professional (CRDIV/CRR/Pro), distance learning and online certification program. To learn more, you may visit: https://www.basel-iii-association.com/CRD_IV_Distance_Learning_Online_Certification.html
B. Instructor-led training.
The association develops and maintains several certification programs and tailor made training programs for directors, executive managers, risk and compliance managers, internal and external auditors, data owners, process owners, consultants, suppliers, and service providers. For instructor-led training, you may contact Lyn Spooner.
The Basel iii Compliance Professionals Association (BiiiCPA) is the largest association of Basel iii Professionals in the world. It is a business unit of the Basel ii Compliance Professionals Association (BCPA), the largest association of Basel ii Professionals in the world. Both associations are business units of Compliance LLC, incorporated in Wilmington NC and offices in Washington DC, a provider of risk and compliance training and executive coaching in 36 countries. Privacy and legal for the BCPA and the BiiiCPA: https://www.basel-iii-association.com/Privacy.htm