Release Date: 14 January 2016                                                                                 

GFMA, IIF and ISDA Statement on the Fundamental Review of
the Trading Book (FRTB) Framework issued today by the Basel Committee on Banking
Supervision

Washington, 14 January 2016 – The Global Financial Markets Association (GFMA), the Institute of International Finance (IIF) and the International Swaps and Derivatives Association (ISDA) have issued the following statement on the Fundamental Review of the Trading Book (FRTB) framework
issued today by the Basel Committee on Banking Supervision (BCBS):

“GFMA, IIF and ISDA share the Basel Committee’s goal of ensuring the safety and soundness of the global financial system, which is critical to enhancing investor and consumer confidence, and economic growth. We have remained supportive of BCBS’s work throughout the G20-mandated post-crisis programme and have continued to do
so during the Fundamental Review of the Trading Book.

“In our preliminary review, we appreciate the technical revisions that have been made to the framework and also commend the BCBS for its commitment to review the rules over time, incorporating outputs from other important regulatory initiatives, such as treatment of sovereigns and simple, transparent and
comparable securitizations.

“Overall, we are concerned that despite the BCBS’s reiteration not to significantly increase overall capital requirements, trading book capital will increase by 40% under the new rules based on the BCBS’s impact assessment.  We worry that the rules may have a negative effect
on banks’ capital markets activities and reduce market liquidity.

“Further impact assessment needs to be run to assess if the gap between the standard and internal models based capital outcomes is reasonable, considering the BCBS’s future work on standardized floors.

“We will be reviewing the rules in depth with our members and look forward to continued discussion with the BCBS to ensure the FRTB meets its original goals.”

-ENDS-

Contacts:

Katrina Cavalli, GFMA                                    +1
(212) 313-1181, kcavalli@gfma.org

Rebecca Hansford, AFME                                             + 44 (0)20 3828 2693,
rebeccca.hansford@afme.eu

Corliss Ruggles, ASIFMA                                               + 852 2537 3029,
cruggles@asifma.org 

Andrew DeSouza, IIF                                                      +1 (202) 857-3602, adesouza@iif.com

Nick Sawyer, ISDA                                                           +44 (0)20 3088 3586,
nsawyer@isda.org

Lauren Dobbs, ISDA                                                        +1 (212) 901-6019, ldobbs@isda.org

The Global Financial Markets Association (GFMA) brings together three of the world’s leading financial trade associations to address the increasingly important global regulatory agenda and to promote coordinated advocacy efforts. The Association for Financial Markets in Europe (AFME) in London and Brussels, the
Asia Securities Industry & Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in New York and Washington are, respectively, the European, Asian and North American members of GFMA. For more information, visit
https://www.gfma.org.

 

The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for
regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central
banks and development banks. For more information visit
www.iif.com.   

Since 1985, ISDA has worked to make the global derivatives markets safer and more efficient. Today, ISDA has over 850 member institutions from 68 countries. These members comprise a broad range of derivatives market participants, including corporations, investment managers, government and
supranational entities, insurance companies, energy and commodities firms, and international and regional banks. In addition to market participants, members also include key components of the derivatives market infrastructure, such as exchanges, intermediaries, clearing houses and repositories, as well as law
firms, accounting firms and other service providers. Information about ISDA and its activities is available on the Association’s website:
www.isda.org.