Featured Product

    FED Publishes Final Supporting Statement for Market Risk Capital Rule

    October 01, 2019

    FED published the final supporting statement for the market risk capital rule. The statement highlights that FED has revised and extended for three years FR 4201, which is the collection of information associated with the market risk capital rule. The market risk rule, which requires banking organizations to hold capital to cover their exposure to market risk, is an important component of the regulatory capital framework of the FED, under the 12 CFR 217 or Regulation Q. The respondents for this collection of information are bank holding companies, savings and loan holding companies, intermediate holding companies, and state member banks that meet certain risk thresholds. No required reporting forms are associated with this information collection.

    FED is revising the FR 4201 (OMB No. 7100-0314) to include certain prior approvals that respondent banking organizations must obtain under the market risk rule. The relevant reporting, recordkeeping, and disclosure requirements can be found in sections 217.203 through 217.210 and section 217.212 of 12 CFR 217. On April 09, 2019, FED had published an initial notice in the Federal Register requesting public comment for 60 days on the extension, with revision, of FR 4201. The comment period for this notice had expired on June 10, 2019. One public comment was received but it was outside the scope of the review of FED under the Paperwork Reduction Act. Post that, FED has published a final notice in the Federal Register on August 02, 2019. 

    The market risk rule applies to any banking organization with aggregate trading assets and trading liabilities equal to 10% or more of quarter-end total assets or USD 1 billion or more. FED may exclude a banking organization that meets these thresholds if FED determines that the exclusion is appropriate based on the level of market risk of the banking organization and is consistent with safe and sound banking practices. FED may further apply the market risk rule to any other banking organization if FED deems it necessary or appropriate because of the level of market risk of the banking organization or to ensure safe and sound banking practices. The market risk rule requires subject banking organizations to:

    • Have clearly defined policies and procedures for determining which trading assets and trading liabilities are trading positions and which trading positions are correlation trading positions
    • Have clearly defined trading and hedging strategies for trading positions
    • Retain certain financial and statistical information regarding the institution's Board-approved sub-portfolios of its portfolio exposures subject to the market risk rule
    • Have a formal disclosure policy that addresses the approach of a banking organization for determining the market risk disclosures
    • Make certain public quantitative disclosures

     

    Related Links

    Keywords: Americas, US, Banking, FR 4201, Regulatory Capital, Regulation Q, Market Risk, Internal Model, FED

    Featured Experts
    Related Articles
    News

    HKMA Publishes Hong Kong Taxonomy for Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) published the Hong Kong Taxonomy for Sustainable Finance.

    May 21, 2024 WebPage Regulatory News
    News

    EU Taking Steps to Set Out and Enforce AI Regulations

    Many believe that the transformative power of generative artificial intelligence (GenAI) has potential to reshape the financial sector in the time to come.

    May 21, 2024 WebPage Regulatory News
    News

    ISSB Releases Digital Sustainability Disclosures Taxonomy

    The themes of the harmonization and interoperability of sustainability disclosure standards among various jurisdictions remain at the top-of-mind for international standard-setting bodies.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Report Studies Implications of Digitalization of Finance

    The Basel Committee on Banking Supervision (BCBS) published a report that examines the implications of the digitalization of finance for banks and supervisors.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Consults on Guidelines for Counterparty Credit Risk Management

    The Basel Committee on Banking Supervision (BCBS) is seeking comments, until August 28, 2024, on guidelines for counterparty credit risk management of banks.

    May 21, 2024 WebPage Regulatory News
    News

    BIS Paper Outlines Vision for Future Financial System

    In a recent paper, the General Manager of Bank for International Settlements (BIS) and the Indian entrepreneur (Infosys co-founder) Nandan Nilekani have laid out a vision for the Finternet, which is proposed to be a network of multiple financial ecosystems, much like the internet.

    April 29, 2024 WebPage Regulatory News
    News

    NGFS Outlines Options for Supervisory Review of Transition Plans

    The Network for Greening the Financial System (NGFS) recently published three reports on the use of transition plans to boost sustainable finance and manage climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    BCBS Issues Discussion Paper on Climate Scenario Analysis

    The Basel Committee on Banking Supervision (BCBS) issued a discussion paper on the use of climate scenario analysis to strengthen the management and supervision of climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.

    April 25, 2024 WebPage Regulatory News
    News

    CFIT to Chair Open Finance Taskforce Announced by UK Government

    The UK government announced the formation of an industry-led Open Finance Taskforce, chaired by the Center for Finance, Innovation, and Technology (CFIT).

    April 25, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8967