The final rule, issued by the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp., will apply to a banking firm with trading assets and liabilities that amount to 10 percent of its total assets or those with $1 billion in assets or more.
While the final rule does not include all methodologies adopted by the Basel Committee on Banking Supervision, the rule does include alternate methodologies for the calculation of standardized specific capital requirements related to securitization and debt positions.
Additionally, the final rule focuses more on delinquent exposures rather than cumulative losses in the calculation of capital requirements, ultimately leading to greater capital requirements on “more subordinate tranches in a securitization.”
The regulators also issued three separate Basel III NPRs that would individually seek to revise risk-based capital standards consistent with agreements of the Basel Committee, revise advanced approaches risk-based capital rules in accordance with the Basel Committee’s standards and effectively harmonize rules to calculate risk-weighted assets.
The final rule is set to take effect on Jan. 1 and is open for comment until Sept. 7.