From our perspective we do not see the necessity to increase the granularity on disclosed information on encumbered and unencumbered assets. Actually we consider the proposed granularity as too high. We understand the necessity to report these figures to competent authorities to have them informed about the level of encumbered assets and the distribution per asset class, but disclosing all these figures to the public has no positive effects.
Therefore we strictly refuse the proposal to split asset classes into sub classes as the burden to implement the CRD IV / CRR requirements would even be increased in an environment where resources are rare already and reporting deadlines tight.
No. The quality of assets and with that respect the liquidity and marketability are already covered via the LCR regime. In the LCR regime assets must meet a variety of very strict conditions to be considered “high liquid” or “extremely high liquid”. Institutions are required to cover their outflows reduced by their capped inflows (net cash outflows) by a sufficient stock of those high liquid assets. Therefore regulators and the market participants are well informed whether an institution holds asset in a quality that is marketable. In case regulators are of the opinion that the level of asset quality etc. shall be disclosed on a granular level this should be performed via the disclosure of the LCR but not on asset encumbrance.
No, we do not think that the disclosure required in template A leads to detection of the level and evolution of assets of an institution encumbered with a central bank.
The nominal amount should not be requested as it is a misleading number. The information of asset encumbrance is gathered in order to receive information about the amount that can be liquidated within a certain period of time. In this context the nominal of a financial instrument is regardless as the market value is the only valid number which should be taken into account.
The granularity does not seem to be too high as it consists of 4 categories (rows) and 2 cluster (columns). Nevertheless it did not came across to us what is actually meant with these cells. We miss a specification what cells shall be filled with what items in detail. The description in the template on an isolated basis is not sufficient to give a valid statement.
For this question it must be considered that on the one hand median values are more reliable as institutions may not boost their figures on a certain point in time and on the other hand that ratios calculated for a certain point in time are demanding lower efforts for institutions. As already mentioned above the implementation effort needed for the CRD IV / CRR rules are high enough and every decision to provide relief is highly appreciated by market participants. In addition the level on encumbered and unencumbered assets is not volatile in a way that a snap shot couldn’t be used to inform financial market participants. At least for a transitional period it makes sense to rely on data calculated on a certain point in time. If required or desired this can be switched to median values later on.
What list is meant here? With the information provided we cannot give a statement on this question.
Nevertheless we agree that the ELA should not be disclosed as it is a facility/line and not an asset.
We agree with 6 months in case a certain point in time must be disclosed. In case median values must be disclosed the implementation and operational efforts are higher and therefore a longer period is needed.