On July 1, ISDA responded to the Reserve Bank of India’s (RBI) consultation on draft amendment directions on the standardized approach for counterparty credit risk (SA-CCR).
ISDA broadly welcomes the RBI’s move to SA-CCR and updated capital treatment for exposures to central counterparties (CCPs), noting the draft directions closely track standards from the Basel Committee on Banking Supervision (BCBS). The response raises five areas for clarification or alignment: (i) the requirement for prior RBI approval of non-zero λj values, which ISDA suggests replacing with a supervisory guidance approach consistent with BCBS frequently asked questions and Hong Kong Monetary Authority practice; (ii) whether the 1.4 alpha factor, designed for internal model method risks, is appropriate under a standardized approach; (iii) support for the draft’s explicit treatment of multi-level client structures; (iv) a requirement for an independent legal opinion to apply a 0% risk weight on qualifying CCP trade exposures, which goes beyond the BCBS standard and could instead be satisfied through internal documented analysis; and (v) the criterion requiring a porting precedent to assess portability as “highly likely”, which should not penalize CCPs that never had a clearing member default.
ISDA also highlights its ongoing global advocacy for SA-CCR to recognize cross-product netting between derivatives and securities financing transactions, referencing the recent response to the US Basel III re-proposal.
Documents (1) for ISDA Responds to RBI Consultation on SA-CCR
Latest
The ISDA Notices Hub: One Year On
In times of war, armed forces are often required to mobilize over large distances at short notice. The most dreaded response to the question of how they are to be transported is ‘by LPC’, meaning ‘leather personnel carrier’ – the...
ISDA Response to OSC Call for Feedback
On June 26, ISDA responded to the Ontario Securities Commission’s (OSC) consultation on facilitating access to its regulatory framework and reducing the burden for capital markets participants by publishing a machine-readable dataset of regulatory instruments. ISDA's comments are supportive of...
ISDA Comments on EP's MISP Draft Reports
On July 15, ISDA shared comments with policymakers in the European Union on the European Parliament’s (EP) draft reports by Member of the European Parliament (MEP) Markus Ferber and MEP Eero Heinäluoma on the Market Integration and Supervision Package (MISP)....
Building Markets, Creating Opportunity
Deep and liquid derivatives markets are fundamental to the development of well-functioning financial markets and healthy economies. They support lending, investment and financial stability, creating the certainty needed for economic growth. But strong derivatives markets do not emerge by chance....
