EU Council shelves limits on structural forex hedge exemptions

Basel rethink on FRTB capital ratio hedging prompts fresh questions over EU implementation

European Union legislators have proposed removing limitations on an exemption contained in draft market risk capital rules, according to leaked documents seen by Risk.net. The exemption covers positions used to hedge structural foreign exchange risks to capital ratios.

The move, discussed in early March, is in response to a signalled revision to the new market risk framework in development at the Basel level. The EU is keen to avoid transposing an out-of-date version of the framework into its o