Recommendations for Public Disclosure of Trading and Derivatives Activities of Banks and Securities Firms

The Basel Committee on Banking Supervision and the Technical Committee of the International Organization of Securities Commissions (IOSCO) today issued updated guidance to banks and securities firms on public disclosures in the trading and derivatives areas. The document identifies categories of information which, if publicly disclosed, will greatly assist markets and counterparties in undertaking sound risk assessment of financial institutions' trading and derivatives activities.

This initiative forms part of a continued effort by the two Committees to encourage banks and securities firms to provide market participants and the general public with meaningful information on their trading and derivatives activities. The two Committees firmly believe that improved disclosures by financial institutions has a strong potential to reinforce supervisors' own efforts to foster a safe, sound and effectively supervised financial system by creating market-based incentives which reward institutions that manage their activities efficiently and in line with stated business objectives.

The paper released today has benefited from comments made by financial analysts and industry practitioners throughout the world. These were generally favourable to the principle of greater disclosure. The two Committees recognise and endorse comments made by industry practitioners to the effect that the value of disclosure depends on achieving the appropriate level of materiality and that legal and proprietary considerations will be important limitations on the amount of information which it is practicable to disclose.

The paper was prepared jointly by the Basel Committee's Transparency Group, chaired by Ms Susan Krause of the US Office of the Comptroller of the Currency, and the IOSCO Technical Committee Working Group on the Regulation of Financial Intermediaries, chaired by Mr Paul Wright of the UK Financial Services Authority.