The Chile Financial Market Commission has published for consultation a new Chapter 21-10 of the Updated Compilation of Banking Regulations, setting minimum requirements and conditions for banks to accept and use collateral as a credit risk mitigator. The framework is intended to apply consistently across regulatory uses of collateral, including provisions, capital, exposure limits, and other supervisory frameworks. The proposal sets expectations for governance and controls over collateral management, establishes general and specific admissibility criteria, and introduces minimum requirements for legal due diligence. It also defines criteria for valuing and revaluing collateral and includes instructions on registration, custody, release, and enforcement of collateral used for credit risk mitigation. To improve consistency, the Commission proposes amendments to Chapter B-1 of the Compendium of Accounting Standards for banks and Chapter 1-13 of the banking regulations to align admissibility and valuation requirements and remove duplicated instructions; it also notes the proposal does not change the calculation of provisions or capital and does not require previously recognised collateral to be discounted. Comments can be submitted via the Commission’s “Regulations Under Consultation” website section until March 28, 2025, alongside a published regulatory report containing an impact assessment.
Chile Financial Market Commission 2025-01-06
Chile Financial Market Commission consults on unified collateral eligibility and valuation requirements for credit risk mitigation
The Chile Financial Market Commission is consulting on a new Chapter 21-10 of the Updated Compilation of Banking Regulations, establishing minimum requirements for banks to use collateral as a credit risk mitigator. The proposal outlines governance, admissibility criteria, and valuation standards for collateral, and suggests amendments to align existing regulations without altering provisions or capital calculations.