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Basel Capital Accords
The Basel Accords refer to the banking supervision accords (recommendations on banking regulations) issued by the Basel Committee on Banking Supervision (BCBS). Basel I was developed through deliberations among central bankers from major countries. In 1988, the Basel Committee published a set of minimum capital requirements for banks. This is also known as the 1988 Basel Accord, and was enforced by law in the Group of Ten (G-10) countries in 1992. A new set of rules known as Basel II was developed and published in 2004 to supersede the Basel I accords. Basel III was a set of enhancements to in response to the financial crisis of 2007–2008. It does not supersede either Basel I or II but focuses on reforms to the Basel II framework to address specific issues, including related to the risk of a bank run. The Basel Accords have been integrated into the consolidated Basel Framework, which comprises all of the current and forthcoming standards of the Basel Committee on Banking Superv ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Basel
, french: link=no, Bâlois(e), it, Basilese , neighboring_municipalities= Allschwil (BL), Hégenheim (FR-68), Binningen (BL), Birsfelden (BL), Bottmingen (BL), Huningue (FR-68), Münchenstein (BL), Muttenz (BL), Reinach (BL), Riehen (BS), Saint-Louis (FR-68), Weil am Rhein (DE-BW) , twintowns = Shanghai, Miami Beach , website = www.bs.ch Basel ( , ), also known as Basle ( ),french: Bâle ; it, Basilea ; rm, label= Sutsilvan, Basileia; other rm, Basilea . is a city in northwestern Switzerland on the river Rhine. Basel is Switzerland's third-most-populous city (after Zürich and Geneva) with about 175,000 inhabitants. The official language of Basel is (the Swiss variety of Standard) German, but the main spoken language is the local Basel German dialect. Basel is commonly considered to be the cultural capital of Switzerland and the city is famous for its many museums, including the Kunstmuseum, which is the first collection of art accessibl ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Secretariat
Secretariat may refer to: * Secretariat (administrative office) * Secretariat (horse) Secretariat (March 30, 1970 – October 4, 1989), also known as Big Red, was a champion American thoroughbred horse racing, racehorse who is the ninth winner of the Triple Crown of Thoroughbred Racing (United States), American Triple Crown, se ..., a racehorse that won the Triple Crown in 1973 * ''Secretariat'' (film), a 2010 film about the racehorse * Secretariat, a pantomime horse based on the racehorse that appeared on ''The Late Late Show with Craig Ferguson'' See also {{Disambiguation ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Net Stable Funding Ratio
During the financial crisis of 2007–2008, several banks, including the UK's Northern Rock and the U.S. investment banks Bear Stearns and Lehman Brothers, suffered a liquidity crisis, due to their over-reliance on short-term wholesale funding from the interbank lending market. As a result, the G20 launched an overhaul of banking regulation known as Basel III. In addition to changes in capital requirements, Basel III also contains two entirely new liquidity requirements: the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR). On October 31, 2014, the Basel Committee on Banking Supervision issued its final Net Stable Funding Ratio (it was initially proposed in 2010 and re-proposed in January 2014). Both ratios are landmark requirements: it is planned that they will apply to all banks worldwide if they are engaged in international banking. Background The net stable funding ratio has been proposed within Basel III, the new set of capital and liquidity requirement ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Central Counterparty Clearing
A central clearing counterparty (CCP), also referred to as a central counterparty, is a financial institution that takes on counterparty credit risk between parties to a transaction and provides clearing and settlement services for trades in foreign exchange, securities, options, and derivative contracts. CCPs are highly regulated institutions that specialize in managing counterparty credit risk. CCPs "mutualize" (share among their members) counterparty credit risk in the markets in which they operate. A CCP reduces the settlement risks by netting offsetting transactions between multiple counterparties, by requiring collateral deposits (also called "margin deposits"), by providing independent valuation of trades and collateral, by monitoring the creditworthiness of the member firms, and in many cases, by providing a guarantee fund that can be used to cover losses that exceed a defaulting member's collateral on deposit. CCPs require a pre-set amount of collateral — referred to as ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Standardized Approach (counterparty Credit Risk)
The Standardized approach for counterparty credit risk (SA-CCR) is the capital requirement framework under Basel III addressing counterparty risk for derivative trades. It was published by the Basel Committee in March 2014. The framework replaced both non-internal model approaches: the Current Exposure Method (CEM) and the Standardised Method (SM). It is intended to be a "risk-sensitive methodology", i.e. conscious of asset class and hedging, that differentiates between margined and non-margined trades and recognizes netting benefits; considerations insufficiently addressed under the preceding frameworks. SA-CCR calculates the exposure at default of derivatives and "long-settlement transactions" exposed to counterparty credit risk. It builds EAD as (i) a "Replacement Cost" (RC), were the counterparty to default today; combined with (ii) the "Potential Future Exposure" (PFE) to the counterparty. For the former: current exposure, i.e. mark-to-market of the trades, is aggr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Credit Valuation Adjustment
Credit valuation adjustments (CVAs) are accounting adjustments made to reserve a portion of profits on uncollateralized financial derivatives. They are charged by a bank to a risky (capable of default) counterparty to compensate the bank for taking on the credit risk of the counterparty during the life of the transaction. These most common transaction types are interest rate derivatives, foreign exchange derivatives, and combinations thereof. The reserved profits can be viewed mathematically as the net present value of the credit risk embedded in the transaction. In financial mathematics one defines CVA as the difference between the risk-free portfolio value and the true portfolio value that takes into account the possibility of a counterparty's default. In other words, CVA is the market value of counterparty credit risk. This price depends on counterparty credit spreads as well as on the market risk factors that drive derivatives' values and, therefore, exposure. CVA is one of a f ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Basel 2
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. It is now extended and partially superseded by Basel III. The Basel II Accord was published in June 2004. It was a new framework for international banking standards, superseding the Basel I framework, to determine the minimum capital that banks should hold to guard against the financial and operational risks. The regulations aimed to ensure that the more significant the risk a bank is exposed to, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability. Basel II attempted to accomplish this by establishing risk and capital management requirements to ensure that a bank has adequate capital for the risk the bank exposes itself to through its lending, investment and trading activities. One focus was to maintain sufficient consistency of regulations so to limit competitiv ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Subprime Mortgage Crisis
The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the Financial crisis of 2007–2008, 2007–2008 global financial crisis. It was triggered by a large decline in US home prices after the collapse of a 2000s United States housing bubble, housing bubble, leading to Mortgage loan, mortgage delinquencies, foreclosures, and the devaluation of Mortgage-backed security, housing-related securities. Declines in residential investment preceded the Great Recession and were followed by reductions in household spending and then business investment. Spending reductions were more significant in areas with a combination of high household debt and larger housing price declines. The housing bubble preceding the crisis was financed with Mortgage-backed security, mortgage-backed securities (MBSes) and collateralized debt obligations (CDOs), which initially offered higher interest rates (i.e. better returns) than go ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Value At Risk
Value at risk (VaR) is a measure of the risk of loss for investments. It estimates how much a set of investments might lose (with a given probability), given normal market conditions, in a set time period such as a day. VaR is typically used by firms and regulators in the financial industry to gauge the amount of assets needed to cover possible losses. For a given portfolio, time horizon, and probability ''p'', the ''p'' VaR can be defined informally as the maximum possible loss during that time after excluding all worse outcomes whose combined probability is at most ''p''. This assumes mark-to-market pricing, and no trading in the portfolio. For example, if a portfolio of stocks has a one-day 95% VaR of $1 million, that means that there is a 0.05 probability that the portfolio will fall in value by more than $1 million over a one-day period if there is no trading. Informally, a loss of $1 million or more on this portfolio is expected on 1 day out of 20 days (because of 5% proba ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Risk
Market risk is the risk of losses in positions arising from movements in market variables like prices and volatility. There is no unique classification as each classification may refer to different aspects of market risk. Nevertheless, the most commonly used types of market risk are: * ''Equity risk'', the risk that stock or stock indices (e.g. Euro Stoxx 50, etc.) prices or their implied volatility will change. * ''Interest rate risk'', the risk that interest rates (e.g. Libor, Euribor, etc.) or their implied volatility will change. * ''Currency risk'', the risk that foreign exchange rates (e.g. EUR/USD, EUR/GBP, etc.) or their implied volatility will change. * ''Commodity risk'', the risk that commodity prices (e.g. corn, crude oil) or their implied volatility will change. * '' Margining risk'' results from uncertain future cash outflows due to margin calls covering adverse value changes of a given position. * ''Shape risk'' * '' Holding period risk'' * ''Basis risk'' The ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Credit Risk
A credit risk is risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial. In an efficient market, higher levels of credit risk will be associated with higher borrowing costs. Because of this, measures of borrowing costs such as yield spreads can be used to infer credit risk levels based on assessments by market participants. Losses can arise in a number of circumstances, for example: * A consumer may fail to make a payment due on a mortgage loan, credit card, line of credit, or other loan. * A company is unable to repay asset-secured fixed or floating charge debt. * A business or consumer does not pay a trade invoice when due. * A business does not pay an employee's earned wages when due. * A business or government bond issuer does not make a payment on ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
