Bank of England floats ‘quasi-IMA’ in FRTB standardised method
Dealers welcome new route to capitalising residual risk, but it could fragment global ruleset
A famous psychological test involves sitting a child alone in a room with a single marshmallow, promising them if it’s still there uneaten after 10 minutes they will be given a whole bag of marshmallows. The aim is to see whether they can resist temptation and choose deferred gratification. The Bank of England seems to be applying the same test to derivatives traders, offering one item of capital relief today that may jeopardise a larger prize tomorrow.
The BoE’s Prudential Regulation Authority
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