US Fed issues standardised approaches NPR
The Fed joins the FDIC in approving the proposed rule for the Basel II standardised framework.
WASHINGTON DC – The Federal Reserve Board has joined with the Federal Deposit Insurance Corporation (FDIC) in issuing the notice of proposed rulemaking (NPR) on the Basel II standardised framework for public comment.
Like the advanced approaches, the standardised rule also seeks to more closely align regulatory capital requirements with institutions' risk and encourage improvements in risk management.
“The increased risk sensitivity of the standardised framework is aimed at both enhancing safety and soundness for the wide range of institutions that will not be adopting the advanced approaches of Basel II and fostering competitive equity for these institutions,” says Randall Kroszner, governor of the Federal Reserve. “Recognising the diversity of banking organisations in the United States, we want to provide these banks with the option of using a more updated capital framework without unduly increasing regulatory burden.”
In a statement, chairman of the Board of Governors Ben Bernanke, said: “The standardised framework provides an alternative way to determine regulatory capital requirements that is more risk sensitive than the current Basel I-based rules, yet is less complex than the advanced approaches final rule. It addresses certain competitive equity issues raised by the industry in light of the implementation of the advanced approaches final rule in the United States. At the same time, its optional nature recognises that the current rules remain appropriate for many banking organisations. I am pleased that the proposed framework calls for increased disclosure and transparency and encourages sound risk management.”
The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) are also considering the NPR. The Fed has authorised the staff to publish the NPR in the Federal Register for public comment after the other agencies complete their approval processes. For the OCC and OTS, that includes a review by the Office of Management and Budget. Comments will be accepted for 90 days from the date of publication in the Federal Register.
Wayne Abernathy, executive vice-president, financial institutions policy and regulatory affairs, ABA, welcomed the release of the standardised approach: “The proposed standard would add to the menu of capital requirement alternatives available to match the varieties in complexity and operations of our nation’s diverse banking industry. Large, complex banking firms are moving towards adopting the advanced capital standards adopted last year. Many other banks may be interested in the proposed intermediate program, which calls for strong capital without the complexity of the Basel II advanced approaches. Yet others could choose to continue with the current, more basic capital standards. In essence, this menu approach means all banks will have strong capital standards, but measured by capital rules more closely matched to the complexity of their operations.”
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Risk, portfolio margin, regulation: regtech to the rescue
A white paper outlining the complexity of setting the course for risk, margin and regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
Most read
- Industry urges focus on initial margin instead of intraday VM
- For a growing number of banks, synthetics are the real deal
- Did Fed’s stress capital buffer blunt CCAR?