Financial Risk Manager Part 2
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- A regulatory analyst employed by a large multinational bank is examining the regulatory requirements mandated by the Basel Committee's Fundamental Review of the Trading Book (FRTB) standards. The analyst delves into the evolution of these FRTB standards, tracing their origin and development from the Basel I and Basel II.5 frameworks. Additionally, the analyst reviews the guidelines for executing these standards. Which of the following statements accurately pertains to the FRTB?
- A regulatory analyst employed by a large multinational bank is examining the regulatory requirements mandated by the Basel Committee's Fundamental Review of the Trading Book (FRTB) standards. The analyst delves into the evolution of these FRTB standards, tracing their origin and development from the Basel I and Basel II.5 frameworks. Additionally, the analyst reviews the guidelines for executing these standards. Which of the following statements accurately pertains to the FRTB?
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A
While Basel I and Basel ll.5 allowed market risk to be calculated at the trading desk level, FRTB requires that market risk be calculated on a firm-wide basis.
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B
While Basel I and Basel ll.5 emphasized the use of a standardized approach to calculating market risk, FRTB encourages each bank to develop and rely on an internal models approach.
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