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The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

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Bank/Capital Regulation

The Basel Committee on Banking Supervision (BCBS) provides a forum to enhance understanding and improve the quality of banking supervision across the globe. The BCBS continues to develop guidelines and supervisory standards on banking, the most notable of which are its international standards on capital adequacy.

The first ‘Basel Accord’ on the international convergence of capital measurement and capital standards (Basel I) was agreed in 1988 and, after certain amendments, was superseded in 2004 by ‘Basel II’ which introduced a more risk-sensitive approach under three pillars: (i) minimum capital requirements; (ii) supervisory review; and (iii) market discipline. The most recent version, ‘Basel III: A global regulatory framework for more resilient banks and banking systems’, was published in December 2010.

Basel III, among other things, seeks to improve the banking sector’s ability to absorb shocks which arise from financial and economic stress, whatever the source, by introducing:

· higher and better-quality capital requirements;

· improved risk coverage;

· a leverage ratio as a backstop to the risk based requirements;

· measures to promote the build up of capital which can be drawn down during periods of economic stress; and

· two global liquidity standards.

Whilst primarily aimed at banks, such provisions will have an impact on hedge fund managers, in particular, due to the amount of capital a bank may be required to set asidewhen making allocations to hedge funds and the possibility that portfolio managers will be included within the scope of certain requirements of national legislation implementing the Basel III recommendations.

The requirements of Basel III will be implemented on an ongoing basis. The most recent progress report on implementation was published in October 2012.

 

Key documents

Basel III summary table

BCBS Basel III implementation report of October 2012 (October 2012)

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Sub Menu

  1. AIMA's Policy Principles
  2. Asset Management Regulation
    1. EU Asset Management Regulation
      1. AIFMD
      2. European Capital Markets Regulation
      3. MiFID / MiFIR
      4. UCITS
      5. European Venture Capital Directive
      6. Shareholder Rights Directive
      7. European Long Term Investment Fund Regulation
      8. Loan Origination Funds
      9. Capital Raising
      10. AIFMD-Related Events
    2. US Hedge Fund Adviser Regulations
      1. Registration and Reporting
      2. Incentive-Based Compensation
      3. JOBS Act
    3. Asia Pacific Asset Management regulation
    4. Other Jurisdictions’ Asset Management Regulation
    5. Systemically Important Financial Institutions ('SIFIs')
    6. Remuneration
      1. UK
      2. United States
      3. CRD IV and CRR
      4. AIFMD
      5. MiFID
    7. Shadow Banking
    8. Volcker Rule
    9. Other
    10. Systemic Risk Reporting
    11. Dealing Commision
    12. Corporate Governance
  3. Markets Regulation
    1. Bank/Capital Regulation
      1. Capital Requirements Directive
      2. EU Bank Structural Reforms
    2. Derivatives/Clearing
      1. EMIR
        1. EMIR Level 1
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        3. EMIR UK Implementation
        4. ESMA technical advice on equivalence
      2. MiFID / MiFIR
      3. MAD / MAR
      4. Dodd-Frank Act Title VII
      5. Hong Kong
      6. IOSCO
      7. Singapore
    3. High Frequency Trading
      1. ESMA Guidelines
      2. MiFID / MiFIR
      3. MAD / MAR
      4. Flash Crash
      5. IOSCO
      6. Germany
      7. CFTC Automated Trading
    4. Insurance Regulation
      1. Solvency II
    5. Market Abuse
      1. MAD / MAR
      2. Indices as Benchmarks
    6. Position Limits
      1. MiFID / MiFIR
      2. CFTC Position Limits
    7. Resolution of Financial Institutions
      1. Europe
        1. EU Bank Recovery and Resolution Directive
        2. EU Non-Bank Recovery and Resolution
      2. CPSS-IOSCO
      3. Financial Stability Board
      4. UK
      5. USA
    8. Short Selling
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      2. Hong Kong Short Selling Regulation
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    11. Trading
      1. MiFID / MiFIR
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        2. MiFIDII MiFIR Level 2 Consultations, legislative process and related AIMA documents
      2. Dodd-Frank Act
  4. Tax Affairs
    1. Automatic Exchange of Information (AEOI)
      1. FATCA
      2. EU - AEFI
      3. OECD - Global Standard on AEFI
    2. Australia - Investment Manager Regime (IMR)
    3. BEPS
    4. FAIFs and FINROFs
    5. FIN 48 and IAS 12
    6. Financial Transaction Tax (FTT)
    7. UK Investment Management Exemption (IME)
    8. UK Offshore Funds Regime
    9. Other
  5. Search
  6. Resources
    1. Guidance Notes
    2. Jurisdictional Guides
    3. Noticeboard
      1. AIFMD
      2. BEPS
      3. CFTC Registration and Exemptions
      4. Dealing Commission
      5. Derivatives
      6. FATCA
      7. FTT
      8. High Frequency Trading
      9. MiFID / MiFIR
      10. Other Hot Asset Management Topics
      11. Other Hot Markets Topics
      12. Position Limits
      13. UK Partnership Tax Review
      14. Trading
      15. Volcker Rule
    4. Hedge Fund Manager Training
    5. Quarterly Regulatory Update
    6. Webinar Programme
    7. Regulatory Compliance Association
      1. About the Regulatory Compliance Association
      2. RCA Curricula and initiatives for alternative investment firms
      3. Meet the regulators and Sr. Fellows