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Capital and Prudential Standards Blog

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Home Archive for category "Shadow Banking" (Page 2)
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Financial Stability Board’s Proposed Framework for Minimum Haircuts on Securities Financing Transactions

Today, the Financial Stability Board (FSB) published a set of policy recommendations and reports designed to strengthen the oversight and regulation of the shadow banking system.  One of the FSB’s reports, entitled Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos, sets out recommendations for addressing financial stability risks in this area, including enhanced transparency, regulation of securities financing and improvements to market structure.

FSB’s Proposed Framework for Minimum Haircuts on Securities Financing Transactions:  Among other things, the FSB report includes a proposed regulatory framework for haircuts on non-centrally cleared securities financing transactions (SFTs). …  Read More

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Basel Committee Publishes Proposal on Capital Requirements for Banks’ Equity Investments in Funds

Today, the Basel Committee published a proposal to revise the existing risk-based capital treatment of banks’ equity investments in funds.  The Basel Committee noted that the existing treatment, set forth in Basel II’s Standardized Approach and Internal Ratings-Based (IRB) approaches for credit risk, do not require banks to reflect a fund’s leverage when determining capital requirements associated with their investments in a fund.  The Basel Committee stated that a fund’s leverage is an important risk driver.

The Basel Committee’s proposal is based on the general principle that banks should use a look-through approach to identify the underlying assets of the investment funds in which they invest.  …  Read More

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