FSA has published its policy statement (PS) and new rule changes to the Handbook definition of connected counterparties and the basis for aggregating exposures to them when applying large exposures limits (see above). The rules changes come into effect immediately. Although EBA has one year to deliver technical standards, FSA believes it is appropriate to pre-empt what these standards should cover. It also clarifies that, in evaluating the risks of an Asset Backed Commercial Paper (ABCP) conduit, FSA assesses both the scheme and the underlying exposures. In this respect, the new rules seek to address the risks posed by conduits sponsored by a bank experiencing financial difficulties. (Source: PS 12/21 – Large Exposures Regime)
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FSA makes rules on exposure to connected counterparties
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