CISI Risk - Chapter 2 Flashcards
What do the BIS do (3)?
Research and cooperation in international banking regulation
Regulators regulator
Banking services for central banks
What is the BIS
Central Bank for central banks
Does the BIS have legal force?
No. Countries implement by making changes to their own law and regulations. The IBF facilitates this
What is the BCBS
Enhance understanding of supervisory issues and improve the quality of banking worldwide.
What is the Pillar 1?
Minimum level of capital
What is Pillar 2?
ICAAP assessment. Firms internal view of capital adequacy
What is Pillar 3?
Public disclosure & Market disipline
What kind of risk would a contagion be associated to?
Systemic
What type of regulation does the BCBS provide?
Prudential Regualtion
What is the equation for Basel 1 ?
Capital
——————————————– > 8%
Credit + Market + Operational
What 4 things are submitted to BASEL in pillar 2?
Risks not covered in Pillar 1
Way that risk is managed
Quality of controls infrastructure
Way in which the risk profile is calculated
What are the two NEW requirements for publication under Pillar 3
NSFR and LCR
What is the ‘Use Test’
Extent to which Risk-Based Decision Making is Embedded within the firm.
2 Evidence to support the use test
Senior Management review & Sing-off procedures.
Capital modelling (Scenario analysis & Stress testing)
In the home/host principle who is responsible for the regulation and activities?
Home
Home/Host principle - What is the Home
Parent company
Home/Host principle - What is the Host
Operation in a foreign market
Basel standards for Internationally active banks?
Apply full set of Basel Standards
Basel standards for Non-International bank
Amended/local set of Basel Standards. Might use full set though.
2 approaches to Regulatory risk?
Principle and statutory
What is principal based approach?
High level binding objectives. Firms interpret principles and account for their actions
What is Statutory approach
Rules based. Rigid rules that MUST be obeyed
3 FCA Statutory objectivesd
Protect customers
Protect Financial Markets
Promote effective competition
How is consumer protection managed (2)?
Conduct Risk
11 FCA Principles
How are Business Standards managed? (1)
Conduct of Business rules (COBS)
How are regulatory process managed? (1)
Risk-BASED REGUALTORY REVIEWS
What
