Regulatory Alerts2019-06-20
Capital Adequacy and Measurement—Market Risk: Structural Position Handling Amendment
The Bank of Israel Banking Supervision Department amends Proper Conduct of Banking Business Directive no. 208 to eliminate the requirement for advance written authorization when banking corporations recognize structural positions used to hedge exchange rate risks against capital ratios. Institutions may now exclude these hedging positions from net open currency position calculations provided they report their intentions in advance, obtain external auditor agreement, self-certify compliance, and implement ongoing internal controls. Any failure to meet these conditions will require the immediate inclusion of the position in the net open currency calculation, with the regulatory responsibility for compliance fully shifted to the banking corporations.