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FRTB: Defining A Target Operating Model

The Fundamental Review of the Trading Book (FRTB) is still a long way away – January 2022 at the latest estimate. But the time will pass quickly. Banks with trading activities need to be planning towards it now or soon.

This blog is derived from a piece of work I did recently for a potential client. It suggests an approach to defining a Target Operating Model (TOM) for implementing the FRTB.

In truth this will be mainly of interest to banks which have not yet started their FRTB planning. For example subsidiaries, smaller banks, and banks with marginal trading activities but exceeding the de minimis exemptions.

Most large banks are well under way with FRTB implementation, and have been for some time, participating in industry groups, Basel Quantitative Impact Studies (QIS) and routine monitoring, getting buy-in from their business leaders, corporate program leaders and strategic IT planners.

But smaller banks, in my experience, are not. Understandably, they prefer to wait and see. There are no real advantages to being first movers in this initiative, which has already evolved far – though not beyond recognition – since 2012.

With so many uncertainties along the path, including Brexit and the strategic regulatory and policy intentions of the US Administration, being in mid-pack is a smart play.

Still, it is worth having a long-term think ahead about how you might eventually implement these rules if you haven’t already.

*** Note: This blog does not constitute advice, but please contact Prism-Clarity for further information, including where to get the best advice. ***

BOEPrism

Risk & Regulation Round-up January to April 2018

This is the latest round-up in the series covering key announcements and developments in UK financial risk and regulation. I take my usual summarised and simplified approach to the main stories, but as always the regulators have been very busy.

A significant development for some of my clients and readers was the announcement by the Basel Committee of key changes to the Fundamental Review of the Trading Book (FRTB), the proposed revamp of the rules on market risk capitalisation of the trading book, which have been in development and consultation for some years: now due for implementation in 2022. See section 1.

Elsewhere, Fintech planning loomed large in the minds of regulatory and government agencies, especially but not only the European supervisory bodies. In similar vein but more broadly, Bank of England Governor Mark Carney made a thoughtful speech on the future of money in the light of the crypto-currency revolution. See section 2.

The topics mentioned here are just key highlights – see the detailed sections for more stories. See individual articles in this blog for links to underlying source stories or documents.

*** Note: The articles in this blog do not constitute advice, but please contact Prism-Clarity for further information, including where to get the best advice. ***

Five Ways To Get Over Writer’s Block

And so VR is once again my guest.
And why is this? Was keyboard unimpressed?

Sincere apologies to Sir Tim Rice for mauling his much better lyrics, but it is the truth. I have been completely unable to get anything out of my keyboard for weeks upon weeks. Apart from one rather geeky diversion into speech punctuation.

To break the spell, at a good friend’s suggestion, I plan to go back to voice writing mode. So this blog – apart from the introduction which was written on tablet – was intended to be written in one hour flat, from start to finish, using voice recognition (VR).

An ironic twist – at this week’s London Book Fair (#LBF18) I spent time helping on the SfEP stall in the hilariously labelled ‘Writer’s Block’ in Hall One at Olympia.

Yes, writer’s block sure is what it feels like – thanks for the reminder!

There is no obvious reason for it. So this blog is an attempt to work out what may be going on. Why does the pen/keyboard/voice suddenly go dry for no apparent reason?

Style Corner: The Uncomfortable World of Speech Punctuation

I’ll admit straight up: speech and quote punctuation is one of my blind spots. It always has been, from the moment I started retraining as a proofreader and copy editor.

It is one of those things where there seem to be so many equally valid variations, and small ones that either matter or don’t. How are we to know which, from a logical point of view?

This blog attempts to bring some sense to the disorder.

To start with, what are the areas of variation?