The Chile Financial Market Commission (CMF) launched a second consultation on a package of regulatory amendments intended to remove obstacles to the development of the repurchase agreement (repo), securitization and loan insurance and derivatives markets, while further refining the application of Basel III standards in Chile. The proposal would amend multiple chapters of the Updated Compilation of Banking Regulations, Chapters B-6 and B-7 of the Compendium of Accounting Standards for Banks, and General Rules Nos. 303 and 451. For repos, the CMF proposes to simplify and clarify the prudential treatment and to deem conditions met for risk weights below 10 percent for transactions executed under a framework agreement recognised by the Central Bank of Chile and for repos cleared and settled through CMF-recognised central counterparties (CCPs), with risk weights potentially falling to 0 percent for certain counterparties and CCP-cleared repos. For self-securitizations, the package removes disincentives by eliminating the 1,250 percent risk weight on bank-retained tranches, enables their registration in the CMF Securities Registry, and introduces the concept of significant risk transfer to guide how capital requirements are calculated based on either the underlying assets or retained securitised instruments. It also sets conditions for recognising loan insurance and derivatives, and the amount of eligible coverage, as credit risk mitigants in risk-based capital requirements. The second consultation follows feedback received during the first consultation in the first half of 2025, which led the CMF to deepen the original proposal and expand the set of regulations to be amended, including provisions still under review for Chapter 21-10 ahead of a final version. Consultation documents, including a regulatory report with core elements and an impact assessment, are available on the CMF website, and the CMF linked the direction of travel to recommendations from the International Monetary Fund’s 2021 Financial Sector Assessment Program.
Chile Financial Market Commission 2025-10-21
Chile Financial Market Commission opens second consultation on Basel III-aligned reforms to repo, self-securitization and credit risk mitigation rules
The Chile Financial Market Commission (CMF) has launched a second consultation on regulatory amendments to enhance the repo, securitization, loan insurance, and derivatives markets, while refining Basel III standards. Key proposals include simplifying prudential treatment for repos, removing disincentives for self-securitizations, and setting conditions for recognizing loan insurance and derivatives as credit risk mitigants. This follows feedback from an earlier consultation and aligns with IMF's 2021 Financial Sector Assessment Program recommendations.