Harmonisation of the unique transaction identifier – technical guidance
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These BCBS guidelines have been developed as part of the G20’s initiative to strengthen the oversight and regulation of the shadow banking system. They introduce a flexible and tailored approach, where measures to mitigate significant step-in risk rely on a supervisory process that is supported by proportionate reporting. In particular:
Banks define the scope of entities to be evaluated for potential step-in risk, based on the relationship of these entities with the bank;
Banks identify entities that are immaterial or subject to collective rebuttals and exclude them from the initial set of entities to be evaluated;
Banks assess all remaining entities against the step-in risk indicators provided in the guidelines, including potential mitigants;
For entities where step-in risk is identified, banks estimate the potential impact on liquidity and capital positions and determine the appropriate internal risk management action;
Banks report their self-assessment of step-in risk to their supervisor; and
After reviewing the bank’s self-assessment analysis, where necessary supported by an analysis of the bank’s policies and procedures, the supervisor should decide whether there is a need for an additional supervisory response. To that extent, the guidelines do not prescribe any automatic Pillar 1 liquidity or capital charge, but rather rely on the application of existing prudential measures available to mitigate significant step-in risk.
These guidelines are expected to be implemented in member jurisdictions by 2020.