Newsletter Nov 2006: Firms seek delay in default risk modelling rules

Finance industry leaders are calling on regulators to delay issuing principles for the recognition of default risk models used by banks and investment banks in their market trading activities. They also want regulators to completely reconsider the objectives and work programme adopted to deal with the measurement of so-called incremental default risk in the trading book and, thus, any capital charge that might be required to mitigate it. Industry insiders say that much more time is needed to develop appropriate rules in this highly complex, and rapidly evolving field.