Clarifications on Market Discipline Disclosure Requirements (Pillar 3) Rules and Guidelines

The Cayman Monetary Regulatory Authority International (the “Authority”) is issuing interim clarifications regarding the Market Discipline Disclosure Requirements (Pillar 3) Rules and Guidelines, effective from 1 September 2021 (the “Pillar 3 Measure”). The Authority is currently in the process of updating the Pillar 3 Measure for Category 'A' and 'B' Banks.

Independent Attestation

As per Rule 31 of the Pillar 3 Measure, “The Authority expects that, at a minimum, the Pillar 3 disclosures will be reviewed as part of both internal and external audit processes.” For the reporting periods ending after 1 September 2021 but before 1 September 2022, these disclosures must be filed directly with the Authority. However, for this initial year of reporting, there is no requirement for an independent audit of Pillar 3 disclosures by an external auditor. Banks may choose to engage an external auditor to review the disclosures at their own discretion, determining the scope of the review as they see fit.

Upon publication, the updated Pillar 3 Measure will provide detailed guidance on the internal and external attestation requirements for public disclosures for reporting periods ending on or after 1 September 2022.

Liquidity Disclosures

Disclosure template LIQ1 for Liquidity Coverage Ratio (LCR) and template LIQ2 for Net Stable Funding Ratio (NSFR) are mandatory only for banks required to file LCR and NSFR as stipulated by the Liquidity Risk Management Rules and Guidelines.

Reporting Period

Rule 13 of the Pillar 3 Measure specifies that “Banks must publish annual Pillar 3 disclosure reports concurrently with their audited financial statements.” This means that the Pillar 3 disclosures must be finalized within the same timeline as the audited financial statements, which is three (3) months following the end of the reporting period. The Pillar 3 Measure does not require banks to publish audited financial statements, but the Pillar 3 disclosure reports should be included within, or alongside, the financial statements and be easily identifiable for users.

If you have any inquiries, please reach out to the Banking Supervision Division via email at [email protected].