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Basel III Rules Set for Patchy Global Start

Many countries will not be ready by January to enforce new banking rules that form the world's regulatory response to the financial crisis, a global supervisory body said on Monday.

The Financial Stability Board (FSB), the G20's regulatory task force, meets in Tokyo on Thursday to help to keep up momentum for implementation of the new rules.

"It is essential that all jurisdictions continue to press ahead and finalise regulations by the deadline or as soon as possible thereafter," said Ingves, also an FSB member and governor of Sweden's central bank.

A source familiar with the G20 work said that comments from Haldane and Hoenig were having no serious impact and that a delay of a few months in the formal implementation of new rules "won't be the end of the world".

"The things that matter to us is that the financial institutions are moving to put Basel in place and they are moving to clean up the quality of capital and build additional buffers," the source said.

Few expect any formal delay in Basel's bank capital rules, but an easing is being finalised for the accord's rules for new bank liquidity or cash-like buffers that come in from 2015.

Market and regulatory pressures have already forced top banks to hold capital at or well above the new Basel III minimum, which won't formally take full effect until the start of 2019.

In many cases market infrastructure, such as clearing houses, was well ahead of the derivatives rules, the source added.

This week FSB Chairman Mark Carney, also governor of Canada's central bank, will be keen to show that G20 appetite for reform is undimmed as he puts the finishing touches to a welter of draft rules to supervise so-called shadow banks.

In effect this would be a parallel system covering credit handled outside traditional banks, such as money market funds, special investment vehicles, hedge funds and repurchase agreements.

Regulators worry that as banks become more regulated, risky activities could migrate to the shadow banking sector. The FSB's drafts will be presented to G20 leaders next month.

The board will also review the number of big banks, such as Goldman Sachs and Deutsche Bank, that face a capital surcharge of between 1 percent and 2.5 percent on top of the Basel III 7 percent minimum because of their size and complexity.

The FSB has said that it would keep reviewing the figure ahead of the surcharge phase-in that starts in 2016. Carney will hold a news conference on Thursday at about 0545 GMT.

(Editing by David Goodman)

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