The industry agrees with the importance of concentration risk measurement and management within an effective risk management framework. However, the legal status of the future EBA is uncertain and respondents have concerns that CEBS guidelines will become binding technical standards.
The Association for Financial Markets in Europe (AFME), the British Bankers Association (BBA), and the International Swaps and Dealers Association (ISDA) responded to the Committee of European Banking Supervisors (CEBS) Guidelines on the Management of Concentration Risk under the Supervisory Review process (CP31). The industry agrees with the importance of concentration risk measurement and management within an effective risk management framework. The response also outlines key issues and positions on the following topics: proportionality; level of application; high-level guidelines rather than check-lists; a broader definition for concentration risk and inter-risk concentrations; intra-risk concentration risk management; stress-testing; and the EU supervisory architecture
CEBS will become the European Banking Authority (EBA) by the end of 2010. However, the legal status of CEBS guidance under the EBA is uncertain and there is a concern that these guidelines will become binding technical standards. AFME/BBA/ISDA would like clarification of what the new supervisory arrangements will mean for CEBS proposed guidelines on concentration risk management and any other guidelines issued by CEBS before it becomes the EBA.
© CEBS - Committee of European Banking Supervisors
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