MUTUAL FUND ASSOCIATION OF TRINIDAD AND TOBAGO
"STRENGTHENING THE ENVIRONMENT FOR INVESTOR CONFIDENCE"

 

Risk-Based Capital Adequacy Regulations

The globalisation of financial institutions and the resultant change in their risk profiles, necessitated regulatory requirements for firms to maintain, at all times, adequate capital commensurate with the level of risk inherent in their business activities. The Basel Committee on Banking Supervision (BCBS), which operates through the Bank for International Settlements, has led regulatory efforts at establishing risk-based capital adequacy standards with the introduction of Basel I in 1988. The BCBS has enhanced its standards over the years taking into consideration the growing complexity of banking activities and gaps in regulations that was most evident given the financial crisis of 2007/ 2008. Basel II was introduced in 2004 and Basel III in 2010. The Basel III Accord is based on three pillars:

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