Response to consultation on guidelines on disclosure of encumbered and unencumbered assets

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Should the disclosure information on encumbered and unencumbered assets, in particular on debt securities, be more granular and include information on, for example, sovereigns and covered bonds? Please explain how sensitive the disclosure of this information is.

EBA should align their requirement with the EDTF recommendations.

Should the disclosure information on encumbered and unencumbered assets also include information on the quality of these assets? What would be a suitable indicator of asset quality? Please explain how sensitive the disclosure of this information is.

We believe IFRS 7 gives comprehensive details on these assets, and it is not necessary to go beyond these requirements.

Do you think that the disclosure required in Template A could lead to detection of the level and evolution of assets of an institution encumbered with a central bank, given that the information should be disclosed based on median values (see paragraph 7 of Title II) and the lag for disclosure is 6 months (see paragraph 10 of Title II)?

It would be far preferable to use period end data rather than median values to ensure consistency with the COREP framework.

Should the disclosure of information relating to the ‘nominal amount of collateral received or own debt issued not available for encumbrance’ on unencumbered collateral be requested? Please explain the relevance of this information for market participants and the sensitivity of the disclosure of this information.

We do not have any view on this question.

Do you agree with the proposed granularity of Template B given that collateral swaps with central banks will not be disclosed? Please explain how sensitive the disclosure of this information is.

We are satisfied with the current format of template B

Do you think that the information on the sources of encumbrance in Template C is too sensitive to be disclosed? Should this information be disclosed in Template D instead (as narrative information)? Please explain the relevance of this information for market participants and the sensitivity of the disclosure of this information.

We do not have any views on this.

Should the information be disclosed as a point in time (e.g. as of 31 December 2014) instead of median values? Please explain why.

We think it is very important that information at point in time is better than median from process, cost and amount of work required to accomplish the desired information

Do you agree with the proposed list of disclosures under narrative information in Template D? Should the guidelines explicitly state that emergency liquidity assistance by central banks (ELA) should not be disclosed?

We are usually in favour of the prescriptive guidelines as to narrative information required under template D so that there is consistency among the reporting institution.

Do you agree that the disclosures should be published no later than six months after the publication of the financial statements? Do you consider a time lag of no more than six months sufficient to ensure that the information disclosed will not adversely impact the financial stability of markets and institutions?

We suggest that such disclosure should be published with the financial statements as not disclosing such information will be against the Corporate Governance Code which places a duty on directors to present a fair and balanced assessment of the firm’s position which could not be provided if the institution was heavily encumbered at time of presenting financial statements

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Name of organisation

HSBC