Tonic’s Basel 3.1 Think Tank offers a practical range of insights into the Basel 3.1 implementation, including jurisdictional go-live details, regulatory overview and impacts, implementation challenges and central resource management.
We also outline Tonic’s end-to-end family of expertise-led Basel 3.1 services, covering health checks, TOM definition and implementation, to protect and accelerate optimal Basel 3.1 operating models for our clients.
Key Timelines
Summary
See below for a breakdown of the Basel 3.1 regulatory go-live dates across key jurisdictions.
There are several key areas of complexity to note:
• There is a discrepancy between go-live dates for key jurisdictions e.g. US – July 2025, EU – Jan 2025
• The majority of jurisdictions have opted for a transitional phased approach per jurisdiction, between 3-5 years
• There are differences in regulatory scope per jurisdiction and differences in transitional go-live scope per jurisdiction
Go-Live Details
Summary
Some jurisdictions have released further details for a short-term vs transitional implementation scope, with more details expected closer to the implementation dates.
There are several major changes being implemented from Day 1, which highlights the need for firms to accelerate their readiness to ensure that they are well prepared ahead of 2025 go-live.
The table below illustrates the key go-live information for the US, EU and UK jurisdictions.
Go-Live Summary – Key Jurisdictions
Regulatory Overview
Summary
On November 30, 2022, the UK PRA finalised the global Basel 3.1 reforms into low-level regulatory technical standards.
The rules represent significant uplift and recalibration of the Basel 3.1 regulatory capital framework, with focus on enhancing risk measurement robustness and standardization/comparability of capital ratios.
See below for a breakdown of the key, cross-jurisdictional Basel 3.1 regulations, carefully handpicked using our consultants' high expertise and deep knowledge of the regulation.
Implementation Challenges
Summary
In complying with Basel 3.1, firms will face multiple implementation challenges that will impact the business, technology and clients.
In order to mitigate these concerns, firms must gain an early view of the key implementation challenges that they will face, driven by their bespoke set-up.
Check out below to see the main areas of impact and the challenges surrounding them.
Central Resource Management
Summary
Basel 3.1 has a major financial impact on in-scope firms, often driving material increases in capital and risk requirements. As such, firms must deploy robust and resilient central resource management, to ensure that they are able to satisfy the higher regulatory requirements, whilst in parallel protecting their liquidity pool to meet day-to-day trading obligations.
Central Resource Management
A Central Resource Management Function will be critical to the successful management of the balance sheet, acting as the 'guardian' of capital and funding requirements, including resource optimization.
As the first line of defense on capital, it will also be tasked with capital/collateral optimization and funding for trading & sales desks (within constraints across balance sheet, ESG, operational and risk), to drive client revenue.
Tonic Basel 3.1 Services
Summary
Due to the high complexity and wide, heavy scope of the Basel 3.1 changes, it is imperative that in-scope firms mobilize their readiness programmes early.
To avoid tactical solutions, with associated cost and profit impact, a critical early step for firms is to define their front-to-back Target Operating Model (TOM).
The Basel 3.1 TOM, tailored per firm, should encompass all regulatory and business-driven changes, across process, technology, data and people streams.
Tonic Services
Tonic provides an expertise-led family of Basel 3.1 transformation services, to accelerate regulatory compliance and critical business goals for our clients.
Tonic’s Basel 3.1services, led by our industry practitioners, include program management, strategy and vision, industry benchmarking, TOM definition and implementation services.
Our experts will leverage their deep experience to help protect key business goals, such as business profitability and scalability, via our strategy and TOM definition services.
TonicX, our expertise-led transformation methodology, will be leveraged throughout to accelerate high-quality transformation and protect successful execution for our clients.
Next Steps
Get in touch below if you would like an informal chat about how our service proposals can help your firm accelerate a high-quality Basel 3.1 implementation.
