FSA: Strengthening Capital Standards 3 - further consultation on CRD3
May 11, 2011
The FSA has published a Consultation Paper called "Strengthening Capital
Standards 3: further consultation on CRD3".
The financial crisis demonstrated that the current market risk framework fails to adequately capture some important risks in firms' trading books. In response, the Basel Committee on Banking Supervision (BCBS) decided it was necessary to increase the risk capture and level of capital requirements in the trading book and credit risk and illiquidity in the trading book.
The CRD changes implement these requirements in Europe and will result in higher market risk capital under both the internal models methods and standardised rules.
The FSA also summarise the feedback they provided in CP10/17 to their previous consultation exercise (CP09/29).