Spotlight on BCBS 239 - It Was Never Going To Happen On Time

<p>Progress towards full BCBS 239 compliance has been slow. The principles-based approach of&nbsp;BCBS 239, coupled with the current lack of compliance benchmarks means that banks are unsure&nbsp;of what exactly “good looks like” in their particular case, and this will differ for each bank. Further&nbsp;problems have been encountered regarding data governance and implementing risk data aggregation&nbsp;systems. The result of this is that no banks were fully compliant on the 1 January 2016 deadline, and&nbsp;since then, progress has remained slow. That no banks were compliant with the BCBS principles&nbsp;has increased the pressure for them to achieve this as quickly as possible; this compliance-focused&nbsp;approach will not see the full operational and best practice benefits that BIS intended.</p>

<p>Very little explicit feedback has been heard from the Basel Committee concerning BCBS 239&nbsp;since the deadline was not reached. There is no mention of BCBS 239 in either the ‘Tenth progress&nbsp;report on the adoption of the Basel regulatory framework’, or any of the ‘Regulatory Consistency&nbsp;Assessment Program (RCAP), Assessment of Basel 3 G-SIB framework and review of D-SIB&nbsp;frameworks’ reports (save for a brief mention in the report for Japan). This may be due to the slow&nbsp;progress of banks to implement BCBS 239, or that national supervisors are unsure about how to&nbsp;measure compliance for the principles without benchmarks or examples of successful implementation.<br />
Most likely the observations are pragmatically contained within the analysis and reports of various&nbsp;regional stress testing initiatives.</p>

<p>This report focuses on the current implementation status of BCBS 239 by systemically important&nbsp;banks, and explores the potential reasons behind the current lack of progress. It also looks at the lack&nbsp;of feedback from the Basel Committee concerning BCBS 239, and reasons for banks to ensure they&nbsp;address the BCBS 239 principles.</p>

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