Regulatory Alerts2006-11-23
Added · Updated
Benchmarking of Stress-testing Practices in relation to Treasury Activities
The regulator requires authorized institutions to implement robust stress testing frameworks that isolate testing execution from front-office trading and cover both banking and trading books. Institutions must conduct comprehensive monthly assessments, simulate historical and hypothetical crisis scenarios, and annually validate stress parameters and risk tolerance limits tied to capital adequacy. Senior management must review trend-analyzed results to identify large variances and trigger timely remedial actions when pre-set limits are breached.
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