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ARTICLE · 18 JANUARY 2016

Basel Publishes Final Rule For Minimum Capital Requirements For Market Risk

Mayer Brown
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On January 14, 2016, the Basel Committee on Banking Supervision (BCBS) published a final rule for minimum capital requirements for market risk as a conclusion to the BCBS' fundamental review of the trading book or, as it is commonly known, the FRTB.

United StatesFinance and Banking
Scott Anenberg
Scott Anenberg
J. Paul Forrester
J. Paul Forrester
Kevin Hawken
Kevin Hawken
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On January 14, 2016, the Basel Committee on Banking Supervision (BCBS) published a final rule for minimum capital requirements for market risk as a conclusion to the BCBS' fundamental review of the trading book or, as it is commonly known, the FRTB.

As explained by the BCBS in a related note, the revisions in the final rule focus on three key areas:

  1. Revised boundary: The boundary between the banking book and trading book has been revised to reduce incentives for a bank to arbitrage its regulatory capital requirements between the two regulatory books, while continuing to respect banks' risk management practices. Notably, stricter limits along with capital disincentives are applied to the transfer of instruments between the banking book and trading book.

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