Europe allows wider role for op risk insurance in Cad 3 [full story]

BRUSSELS - European banks and investment firms would be able to use operational risk insurance to reduce capital charges in all approaches to measuring op risk under new European Union (EU) capital adequacy rules, banking industry and regulatory sources said in early November.

That would be good news for European investment firms and asset managers and their supervisors, who feared the firms would be required to set aside penal amounts of protective capital to guard against operational hazards such as fraud, technology failure, legal risk and settlement errors.

But it would open up an unwelcome gap for some national regulators between the European Commission’s third capital adequacy directive, or Cad 3, and the Basel II bank capital adequacy accord. The present

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