ISDA Highlights Uncertainties as to Capital Treatment of Trading Positions

In a recent Report titled "The Fundamental Review of the Trading Book and Emerging Markets," ISDA highlighted uncertainties concerning the implementation of the Fundamental Review of the Trading Book ("FRTB"), the revised framework for market risk capital, and whether all jurisdictions will satisfy the Basel Committee's 2022 implementation target.

ISDA reported that the framework was developed for large and "globally active banks." However, ISDA raised questions regarding the most appropriate approach for smaller banks and the degree to which the framework will affect institutions in emerging markets. ISDA called on supervisors to take into account local specificities when implementing the FRTB, particularly in less-developed markets.