BASEL – The Basel Committee on Banking Supervision (BCBS) has issued final standards on measuring and controlling large exposures. This is specifically aimed at large broker-dealers that could suffer heavy losses from the default of one trading counterparty to which they are exposed across many transactions – as was the case with Lehman Brothers in 2008. To reduce this risk, BCBS has capped the exposure to a single counterparty as a percentage of the bank’s capital.

LONDON – The Bank of England’s Financial Policy Committee (FPC) has indicated that it will include the possibility of varying the leverage ratio required of UK banks as one option in a review of the role of the leverage ratio in the overall capital framework. The UK treasury asked the FPC to undertake this review in November 2013, and the Bank of England plans to complete the work by November 2014.

Market participants are praising Basel’s more risk-sensitive measures, but valuation adjustments remain a key source of uncertainty, says Philip Alexander.

Markets are fragmenting, but the Fed says charges of Balkanisation levelled at the US are ‘curious’ given similar moves in the EU. Charles Piggott investigates.

The enlarged role for central clearing counterparties is forcing both regulators and industry participants to think about the risks posed by these new systemic entities, finds Michael Marray.

The biggest US banks ended up at the bottom of the pile in this year’s stress tests. Analysts say the message is political reports Charles Piggott.

The industry is bracing for the possibility that Basel will ask banks to hold capital against interest rate risk on the banking book, writes Philip Alexander.

High-ranking member of the US House Committee on Financial Services Scott Garrett has launched a bill to reform the US Financial Stability Oversight Council (FSOC). “Over the last two years, it has become increasingly apparent that the [FSOC], created by the Dodd-Frank Act, is in serious need of reform,” said the Republican congressman announcing the bill on April 3. “The council meets in secret, refuses to disclose substantive transcripts, and blocks any requests by other regulators or members of Congress for a more open and transparent process.”

The CFTC’s acting chairman Mark Wetjen has signed a memorandum of understanding (MOU) with the Alberta Securities Commission, the British Columbia Securities Commission, the Ontario Securities Commission and the Autorité des Marchés Financiers, aimed at enhancing cross-border supervision of firms operating in both countries.

In a letter dated April 3, Federal Reserve governor Jeremy Stein has tendered his resignation to President Barack Obama. He will leave the Fed on May 28, 2014 to return to his previous teaching position at Harvard University’s economics department. Mr Stein, who joined the Fed in 2012 on loan from Harvard University, needed to return within two years to keep his professorship.