Achieving Basel III Compliance – How to tackle IT and business issues

The new Basel III rules will have a significant impact on the banking world – not just on the business environment, but also for the technology required to underpin compliance. The impact on both is considered in this paper.

Basel III implications for the business have been grouped under three main headings:

  • Trading book risk
  • The introduction of a global liquidity risk standard, and
  • The requirements of the capital base

Trading book risk covers enhanced counterparty credit risk requirements, such as stressed parameters for market and counterparty credit risk, credit valuation adjustment (CVA) and wrong way risk. The global liquidity risk standard focuses on new liquidity ratios and additional monitoring metrics, such as the concentration of funding; and the aim of the new capital base requirements is to increase the quality, quantity and international standardization of the capital base. Each of these areas raise different challenges from a business perspective.

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