Regulatory Arbitrage after Basel III: We invite articles on regulatory differences

The Basel iii Compliance Professionals Association (BiiiCPA) is inviting articles and comments on regulatory differences in the implementation of the Basel III framework around the world. Some of these articles and comments will be shared with all members. George Lekatis, president of the BiiiCPA, said: “Although Basel III is a really good framework, inconsistencies in the application of the Basel III principles can lead to important regulatory differences."
WASHINGTON - Sept. 26, 2013 - PRLog -- The Basel iii Compliance Professionals Association (BiiiCPA) is inviting articles and comments on regulatory differences in the implementation of the Basel III framework around the world. Some of these articles and comments will be shared with all members.

George Lekatis, president of the BiiiCPA, said:

“Although Basel III is a really good framework, inconsistencies in the application of the Basel III principles can lead to important regulatory differences. It is true that national rules adopting Basel III follow in many aspects the Basel III papers closely, but it is also true that there are national discretions that lead to regulatory arbitrage challenges (or opportunities) for countries, financial organizations and investors.

We have compiled a list with about 60 differences, like:

1. The scope of the application of the Basel III framework around the world. An interesting difference is the application of the framework to investment firms.

2. The “Basel Plus”, “Just Basel” or “Basel Minus” national discretion. There is an amazing “gold-plated” implementation in some countries. In other countries we see the opposite.

3. The ability to pay dividends even if the Basel III requirements are not met (a national discretion).

4. Differences in grandfathering of existing capital instruments that would no longer qualify as the same type of regulatory capital.

5. Other laws and regulations that affect the Basel III implementation. Examples are the EU Recovery and Resolution Directive, the US Dodd-Frank Act (and the US prohibition on the use of credit ratings, which is not consistent with the Basel III rules).

6. Differences in the regulatory adjustments and deductions for the common equity tier 1 capital.”

George continued:

“I really enjoy some questions about the Basel III implementation, especially from hedge funds managers:

“Which banks are not likely to pay dividends due to Basel III?”

“Which banks are likely to fail in the Basel III related regulatory stress tests? When exactly we will investors learn that these banks have failed?”

“Which countries will make compliance way more expensive or way less expensive for banks? What about the Return of Equity in these countries and banks?”

You may send your regulatory arbitrage remarks to George Lekatis at lekatis@basel-iii-association.com.

About the Basel iii Compliance Professionals Association (BiiiCPA): 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),  which is also the largest association of Basel ii Professionals in the world. Both associations are owned by Compliance LLC, a provider of risk and compliance training and executive coaching in 36 countries.

Basel iii Compliance Professionals Association (BiiiCPA)
1200 G Street NW Suite 800
Washington DC 20005, USA
Tel: (202) 449-9750
Web: www.basel-iii-association.com
HQ:   1220 N. Market Street Suite 804
Wilmington DE 19801, USA
Tel: (302) 342-8828

Reading Room of the BiiiCPA

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