Internal model cull to create ‘perverse incentives’

Isda AGM: Standardised capital approaches create herding behaviour, says JP Morgan exec

Standardised calculations can create crowded trades

Recent moves by the Basel Committee on Banking Supervision to restrict the use of the internal ratings-based approach to modelling could create "perverse incentives" for banks to invest in the same assets, according to a JP Morgan regulatory expert.

The Basel Committee recently published a consultation paper looking at reducing the variation of credit risk modelling by banks in a bid to increase both transparency and comparability. However, speaking on April 13 at the International Swaps and

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