Clarifications to the Market Discipline Disclosure Requirements (Pillar 3) Rules and Guidelines (2022-08-02)

Summary

This is a Supervisory Information Circular in which CIMA provides interim clarifications on how banks should apply the Market Discipline Disclosure Requirements (Pillar 3) Rules and Guidelines (effective 1 September 2021), pending forthcoming amendments to that measure for Category 'A' and 'B' banks. It addresses three areas: independent attestation of disclosures, liquidity disclosure templates, and the timing of annual Pillar 3 reports.

• Attestation: For the first reporting cycle (periods ending after 1 September 2021 but before 1 September 2022), Pillar 3 disclosures must be filed directly with the Authority and there is no requirement for external audit of these disclosures, although banks may choose to have their external auditor review them, in which case the bank itself sets the scope of that review. The revised Pillar 3 Measure, once issued, will set out attestation requirements for periods ending on or after 1 September 2022.
• Liquidity disclosures: The LIQ1 (Liquidity Coverage Ratio) and LIQ2 (Net Stable Funding Ratio) templates are only mandatory for banks that are already required to file LCR and NSFR data under the Liquidity Risk Management Rules and Guidelines.
• Timing: The requirement to publish annual Pillar 3 disclosures concurrently with audited financial statements means the disclosures should be finalized within the same three-month post-period-end timeline used for audited financial statements. The circular does not create a new obligation to publish audited financial statements, but where Pillar 3 disclosures are appended to or embedded in financial reporting, they must be clearly identifiable to users.

Key obligations

• Banks must file Pillar 3 disclosures for reporting periods ending after 1 September 2021 but before 1 September 2022 directly with the Authority.
• Banks that opt to have an external auditor review their Pillar 3 disclosures for this first reporting year must themselves determine the scope of that review.
• Banks required to file LCR and NSFR data under the Liquidity Risk Management Rules and Guidelines must complete the LIQ1 (LCR) and LIQ2 (NSFR) disclosure templates.
• Banks must finalize their annual Pillar 3 disclosure reports within the same timeline required for audited financial statements, i.e. within three months after the end of the reporting period.
• Where Pillar 3 disclosure reports are appended to or form part of a bank's financial reporting, they must be easily identifiable to users.

Applies to

banks, Category 'A' banks, Category 'B' banks

Deadlines

• periods ending after 1 September 2021 but before 1 September 2022: Pillar 3 disclosures for this first reporting cycle must be filed directly with CIMA, with no independent external audit requirement.
• three (3) months after the end of reporting period: Annual Pillar 3 disclosure reports must be finalized within the same timeline required for banks to provide audited financial statements.
• reporting periods ending on or after 1 September 2022: The revised Pillar 3 Measure, once published, will address internal and external attestation requirements for public disclosures from this point forward.