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

Creating Value - IQ June 2025

Ever since its establishment 40 years ago, ISDA has worked to enhance the safety and efficiency of derivatives markets. That has motivated everything we do – from the development of standard documentation and the rollout of new digital solutions to...

Paper on EC’s Sustainability Omnibus Proposal

On June 9, ISDA published a position paper setting out its views on the European Commission’s (EC) Sustainability Omnibus Package. In the paper, ISDA urges European authorities to: Ensure a proportionate, harmonized and symmetrical approach to the use of derivatives...