The Fundamental Review of the Trading Book and Emerging Markets

In January 2019, the final piece of Basel III fell into place with the publication of the revised framework for market risk capital, known as the Fundamental Review of the Trading Book (FRTB).

The FRTB makes a number of important changes, including the introduction of a more risk-sensitive standardized approach (SA), desk-level approval for internal models, and a capital add-on for non-modellable risk factors (NMRFs).

With the rules now finalized, attention turns to national implementation, but there are uncertainties about how the rules will be transposed, and whether all jurisdictions will meet the Basel Committee on Banking Supervision’s (BCBS) 2022 implementation target.

For banks in emerging markets, implementation poses some particular challenges. These include barriers to entry, a shortage of data and concerns about the treatment of sovereign debt. While it is important for the framework to be implemented as consistently as possible, it is also imperative that regulators and market participants monitor and understand the impact on emerging market banks and economies.

Click on the PDF below to read the full report.

Want to know more? ISDA is hosting Symposiums in London and New York on FRTB and Counterparty Risk:

Trading Book Capital:
Fundamental Review of the Trading Book “FRTB” & Counterparty Risk

LONDON

June 13

AGENDA       REGISTER

NEW YORK

June 20

AGENDA       REGISTER

Documents (1) for The Fundamental Review of the Trading Book and Emerging Markets

Paper on Liquidity Assessment for Single-name CDS

On September 5, ISDA submitted a paper to the European Securities and Markets Authority (ESMA) and the European Commission in support of its earlier response to ESMA’s Markets in Financial Instruments Regulation (MIFIR) review consultation package 4 (CP4) on transparency...

Response to EC on Delegated Regulation

On September 4, ISDA responded to the European Commission’s (EC) consultation on amendments to delegated regulation (EU) 2017.567. The key area of interest for ISDA was the proposed insertion of a new article 16a that establishes what constitutes a post-trade...

Raising Clients’ Awareness on Portability

Clients accessing a central counterparty (CCP) via a client clearing service provider (CCSP) for over-the-counter (OTC) and exchange-traded derivatives should consider what may happen to their positions and collateral in a scenario in which the CCSP defaults. While regulatory regimes...

Response to FCA on Ancillary Activities Test

On August 28, ISDA and FIA submitted a joint response to the Financial Conduct Authority’s (FCA) consultation paper CP25/19 on the ancillary activities test to determine if commercial users or producers of commodities that trade in commodity derivatives, emission allowances...