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FRTB: Is your bank prepared?

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New banking regulations are piling up, and banks are struggling to make strategy calls. For example, as of April 2015, JP Morgan had more than 950 people working on just four strands of regulation that include over 750 distinct requirements.

Regulatory requirements with major impacts for JP Morgan:

  1. The leverage ratio
  2. Rules on global systemically important banks
  3. Fundamental review of the trading book (FRTB) – new trading book reforms
  4. Comprehensive Capital Analysis and Review (CCAR) – US regulators’ annual stress tests

Debbie Toennies, head of regulatory affairs for the corporate and investment bank at JP Morgan, says: “That is 27 different capital ratios, with 225 models built recently. It doesn’t count liquidity, which is another 400 people. And then if you look at derivatives, with 99 proposed and final regulations in the US and 237 final articles in the EU, we have more than 3,150 pages of regulation affecting this market and more than 700 people devoted to understanding and interpreting those.”  

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