European regulators lag on model validation, top quant claims
Supervisors in mainland Europe are 'all over the map' on model validation, says Morgan Stanley's Jon Hill
European regulators are lagging their US and UK counterparts in ensuring that quantitative models are subject to independent validation, a senior quant has claimed.
US regulators require banks to independently validate all capital models – and it is generally considered good practice to do this for all models used for risk management, finance and accounting purposes.
Models should be validated by a team that is completely independent from the model developers, but the lines of separation can be
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