Fundamental Review of the Trading Book (FRTB) aims to harmonise the treatment of market risk across countries and rectify some of the issues that affected banks during the financial crisis. However, the now delayed timeline of January 2022 to implement FRTB should considerably ease the challenge faced for many regions and countries as they deal with the complex nature of the rules.
In this paper, we share a checklist to help banks navigate through the process of FRTB implementation.
This checklist provides a guide for boundary classification, data management, and systems change requirements for both Standardised Approach (SA) and Internal Model Approach (IMA)
The maximum impact of FRTB implementation will be felt by banks in terms of increased operational, capital, liquidity risk management, and reporting requirements.
In our view, banks also need to start preparing themselves to deal with any challenges that come up post implementation of FRTB, and for this, having a flexible and dynamic IT infrastructure, powerful data management tools, and upgraded internal skillsets in place will prove to be critical.