With the transition to the Basel 2 regime for the assessment of bank capital for regulatory purposes less than seven months away, the Australian Prudential Regulation Authority has now published the rules on market disclosure that will apply to banks next year.Disclosure has always represented the "third pillar" under revised approach to monitoring and measuring bank capital, at least as far as regulators are concerned.APRA released a draft of the rules it plans to apply to banks, with one set applicable to a handful of larger banks and a simplified set applicable to all the rest following the "standard" approach to Basel 2, including foreign banks and small mutuals.For banks adopting any variant of the "advanced" approaches to Basel 2 - meaning the four major banks and perhaps two others - there's a new regime of half-yearly reporting in a prescribed format and which for listed banks isn't that different to what they report now. The disclosure rules may provide much better insight into the activities of a bank such as HBOS Australia, owner of Bank of Western Australia.Most of the half-yearly reporting requirements cover ground that banks likely to apply advanced reporting under Basel 2 already disclose. The chief novelty is a requirement to disclose the risk-weights that banks allocate to different classes of lending (since banks will make these decisions themselves rather than follow a formula from APRA as they have for the last 18 years).Banks will have to break this down by portfolio (corporate, residential, credit cards and other retail) and also analyse their loss experience in more detail than now.Another novelty might be the requirement to discuss, without quantifying, the bank's approach to management, and insurance of, operational risks.Another is a requirement to estimate the level of additional capital a bank may have to provide its own creditors in the event of a credit rating downgrade.For all other banks the quarterly disclosure requirement is pretty minor: little more than a basic outline of their capital structure and credit risk.Still, for plenty of small foreign retail banks, credit unions and building societies this will be more disclosure than they've volunteered in the past, and for the smallest institutions another costly compliance headache.