Regulatory Alerts2025-01-01
Banking and Financial Services (Computation of Minimum Capital Requirements for Market Risk) Directives, 2025
The Bank of Zambia issued the 2025 Directives to establish a comprehensive regulatory framework for calculating minimum capital requirements against market risk exposures in the trading books of licensed banks and financial institutions. The rules mandate strict classification criteria distinguishing trading from banking book positions, require daily mark-to-market valuation with conservative model-based alternatives, and enforce internal governance standards for hedge management and position allocation. Capital charges are computed using standardized maturity ladders and risk weight tables to quantify specific and general market risks across interest rates, equities, foreign exchange, and commodities, incorporating vertical and horizontal disallowances to capture basis, gap, and yield curve exposures.