Pillar 3
Pillar 3 (Market Discipline)
Definition
The third pillar of the Basel framework requiring banks to publicly disclose information about their risk exposures, risk assessment processes, and capital adequacy. Pillar 3 aims to enhance market discipline by enabling market participants to assess a bank's risk profile and capital strength.
Regulatory Context
The Basel Committee has progressively expanded Pillar 3 disclosure requirements, introducing standardised templates and tables. The EBA implements Pillar 3 through binding technical standards under the CRR. ESG-related Pillar 3 disclosures have been introduced in recent years.