On July 2, 2021, ISDA and the Association for Financial Markets in Europe (AFME) submitted a response to the European Banking Authority (EBA) on its consultation on the draft regulatory technical standards on emerging market and advanced economies as part of the Fundamental Review of the Trading Book framework.
In order for institutions to be able to calculate their own funds requirements under the sensitivities-based method, Article 325ap(3) of the Capital Requirements Regulation requests the EBA to specify the economies that should attract lower risk weights for equity risk under the FRTB standardized approach (so-called advanced economies) with other economies subject to higher risk weights.
The industry supports an approach that takes into account economic evolution as well as development of markets instead of relying on the static Basel Committee on Banking Supervision list. The industry believes there are no simple econometric methodologies that can be applied in order to achieve a precise definition of an advanced market. We believe economic integration in Europe, both within the European Union and the European Economic Area, including advanced common investor protections and disclosure requirements, cross-border access and access to a wide range of financial services providers, have effectively resulted in a system that can be defined as an advanced economy.
Documents (1) for ISDA and AFME Respond to EBA on Emerging Markets and Advanced Economies under FRTB
Latest
Response on Commodity Derivatives Markets
On April 22, ISDA and FIA submitted a joint response to the European Commission’s (EC) consultation on the functioning of commodity derivatives markets and certain aspects relating to spot energy markets. In addition to questions on position management, reporting and...
Episode 50: The Value of Derivatives
A new report from ISDA shows that companies all over the world use derivatives to alleviate uncertainty, transfer risk and enhance profitability. ISDA discusses the findings with Boston Consulting Group’s Roy Choudhury. Please view this page via Chrome to access...
ISDA/IIF Response to EC Market Risk Consultation
On February 22, ISDA and the Institute of International Finance (IIF) submitted a joint response to the European Commission’s (EC) consultation on the application of the market risk prudential framework. The associations believe the capital framework should be risk-appropriate and...
ISDA Submits Letter on Environmental Credits
On April 15, ISDA submitted a response to the Financial Accounting Standards Board’s (FASB) consultation on environmental credits and environmental credit obligations. The response supports the FASB’s overall proposals to establish clear and consistent accounting guidance for environmental credits, but...