Isda and Liba protest against CAD3 divergences from Basel II
The International Swaps and Derivatives Association (Isda) and the London Investment Banking Association (Liba) have released their joint response to the European Union's third capital adequacy directive (CAD3). The response was delivered at non-public hearings held at the end of January by the EU, but was not made public until yesterday.
The two banking industry associations, which have worked closely together on many of the Basel II-related regulatory initiatives, were greatly concerned about places in which the CAD3 document departed from the most recent releases from the Basel committee, including the Technical Guidance to the third Quantitative Impact Study (QIS3).
Specifically, the two groups were concerned about:
- the hedging criterion for trading book eligibility, which is not mentioned in the CAD3 text;
- the fact that
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