ISDA Responds to PRA Consultation on Basel 3.1 Implementation

On March 31, ISDA and the Association for Financial Markets in Europe (AFME) submitted a joint response to the UK Prudential Regulation Authority’s (PRA) consultation on the implementation of the Basel 3.1 standards.

The implementation of the Basel 3.1 standards in the UK is a necessary element of preserving financial stability and provides an opportunity to review the framework more holistically, ensuring it is appropriately calibrated and takes account of the specificities of the UK market. It is crucial that the Basel 3.1 framework is implemented in a risk-sensitive way that results in a robust UK banking sector that is effective in financing the wider economy.

The consultation response includes proposals for targeted revisions to the output floor, credit risk, credit risk mitigation, credit valuation adjustment risk, standardized approach for counterparty credit risk, market risk and operational risk frameworks to improve the risk sensitivity of the requirements, reduce unnecessary burdens on firms and ensure that corporates and other end users are still able to access key financing, liquidity, and hedging services at a reasonable cost.

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