Summary: | Banks are reminded that reporting a significant amount of trading assets on the balance sheet, or increasing the percentage of assets reported as trading assets, may subject a bank to the market risk capital requirements (Part 325, Appendix C, of the FDIC's Rules and Regulations). In general, these requirements are applicable to banks whose gross "trading activity" equals $1 billion or more, or 10 percent or more of total assets. Banks that adopt Financial Accounting Standards Board Statement No. 159, The Fair Value Option for Financial Assets and Liabilities (FAS 159), and apply this option to securities should determine whether the resulting designation of these securities as trading would result in the application of the market risk capital requirements. The market risk capital rules require banks to have certain risk measurement systems in place prior to conducting trading activity that meets the size criteria outlined above. Institutions that expect to exceed the threshold minimums should contact their FDIC Regional Office in advance to discuss plans and preparations for complying with the market risk capital requirements. |
Highlights:
Distribution: Suggested Routing: Note: To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html . Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1- 877-275-3342 or 703-562-2200). |
Additional Related Topics:
- Risk-Based Capital Rules
- 12 CFR Part 325
- Appendix C: Market Risk
FIL-64-2007