"We do not believe that sufficient time has been given to the industry to develop the necessary tools to engage appropriately and responsibly [in the QISs] on the timeline proposed", says theletter from the Global Financial Markets Association, the Institute of International Finance and the International Swaps and Derivatives Association.
The committee is understood to be reluctant to budge, however, fearing a delay with the two planned QISs would push implementation of the regime into 2018 – a decade after the crisis reached its first peak.
If regulators stick to their guns, the studies will suffer, bankers claim. "To do it properly – incorporating these changes systematically into the bank's architecture – is nigh-on impossible in six months. If this is the timetable they want, then it will be done on a best-efforts basis, but it will be flawed. The complexity of the problem is just too great", says one European bank's head of strategic risk management.
And some argue the timeline does not have to be rigid, in part because the committee is under less pressure than with itslast revisions to the trading book regime – known as Basel 2.5 – which were implemented in Europe at the start of 2012. "I'm a bit surprised at the rush, because the politics are a bit easier. It's not like Basel 2.5 – that was an immediate band-aid with pressure from the Group of 20 nations. This was supposed to be about getting it right, and sometimes that takes longer", says the head of regulatory strategy at another European bank.
The first of the two new trading book QISs would look at a set of so-called shadow portfolios, and is slated for completion in the first half of 2014. The second would be applied to a full implementation of the new rules and is due by the end of the year. Both studies would require banks to report desk-level capital requirements using the revised standardised and internal model methods that were laid out in a second consultative paper at the end of October. The second QIS would also include a firm-wide total.
Full article (Risk.net subscription required)
© Risk.net
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article