Pillar 3 disclosure requirements – updated framework

Banking Policy Department Our Ref: B1/15C CB/POL/4/5/34 17 December 2018 The Chief Executive All Authorized Institutions Dear Sir/Madam, Pillar 3 disclosure requirements – updated framework As you may be aware, the Basel Committee on Banking Supervision (“BCBS”) issued a standard on Pillar 3 disclosure requirements – updated framework1 on 11 December 2018 (“December 2018 package”). These requirements, together with the two previous updates2 , complete the revised Pillar 3 framework. In finalising the December 2018 package, the BCBS has taken into consideration feedbacks from banks and users of Pillar 3 disclosures. Included in the package are new / revised disclosure requirements on: (i) corresponding capital standards set out in the Basel III post-crisis regulatory reforms released by the BCBS in December 2017; and (ii) asset encumbrance, capital distribution constraints, as well as prudential treatment of problem assets. According to the BCBS timeline, the implementation dates for disclosure requirements in item (i) above will be 1 January 2022, and those in item (ii) end-December 2020. The HKMA will consult the industry in due course on the relevant implementation proposals to give effect to the disclosure requirements of the December 2018 package. In the meantime, locally incorporated authorized institutions (to which the December 2018 package will 1 Please see http://www.bis.org/bcbs/publ/d455.pdf 2 These refer to the Revised Pillar 3 disclosure requirements and the Pillar 3 disclosure requirements – consolidated and enhanced framework published by the BCBS in January 2015 and March 2017 respectively, which were in turn the subject of the Banking (Disclosure) (Amendment) Rules (“BDAR”) 2016 and the BDAR 2018.

2 be applicable) are strongly recommended to study the relevant disclosure requirements and consider any system changes that are necessary for their implementation. Should you have any questions relating to this letter, please feel free to contact Miss Theresa Kwan at tyykwan@hkma.gov.hk or Mr Lai-chun So at lcso@hkma.gov.hk. Yours faithfully, Frank Leung Acting Executive Director (Banking Policy) cc: The Chairperson, The Hong Kong Association of Banks The Chairman, The DTC Association FSTB (Attn: Ms Eureka Cheung)