Basely Committee on Banking Supervision changes the rules of capital reserves for financial institutes

Basely Committee on Banking Supervision changes the rules of capital reserves for financial institutes

Friday, 26 June, 2020

 

BCBS rewrites the rules about how much capital has to be saved up for a proper capitalization exposure to the market risk. Value-at-risk has been replaced by the Expected Shortfall. This creates a hard boundary between the banking and trading books.

The new regulation will be implemented up to 2023, but European jurisdiction will probably use those guidelines sooner.  To manage to be able to do so companies will have to immediately start using the new Fundamental Review of the Trading Book guidelines.

Source:
https://www.bis.org/bcbs/publ/d457_inbrief.pdf

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