The Basel Committee is reviewing its supervisory guidance on managing settlement risk in foreign exchange (FX) transactions. It seeks views on its key recommendations, including:
- reducing principal risk by using market infrastructures that provide payment-versus-payment arrangements;
- the need to hold enough capital against potential exposures resulting from FX settlement-related risks; and
- minimising legal risk, by ensuring that agreements and contracts are legally enforceable for each aspect of its activities in all relevant jurisdictions.
It asks for comment by 12 October.(Source: Basel Committee Consults on Managing FX Settlement Risk)