Several U.S. banking agencies recently approved a joint final rule, set to go into effect on January 1, 2013, regarding the amount of capital required under risk-based capital rules for banking organizations to cover market risk.  The new rule aims to revise banking organizations’ internal modeling practices to better analyze and calculate their exposure to market risk in their trading positions (both current risk and, importantly, the risk that may arise during periods of financial stress), and imposes certain disclosure obligations designed to increase transparency.  Specific risk capital requirements for securitization positions are also addressed by the final rule.  Patrick Dolan, Robert Ledig, Gordon Miller and David Meyers provide a comprehensive breakdown of the rule and its requirements for banking organizations in a recent Dechert OnPoint, which can be found here.

By: Stewart McQueen and Eric Kotloff