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27 Cards in this Set
- Front
- Back
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Basel-based int'l org that serves as a bank for central banks and a forum for int'l monetary and financial co-operation |
Bank for Int'l Settlements (BIS) |
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What are the 3 main categories of risk |
Credit risk Market risk Operational risk |
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the risk of loss cause by the failure of a city to settle its obligations |
credit risk |
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the risk of loss of earning or capital arising as a result of mvmts in the market prices |
market risk |
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the risk of loss resulting from inadequate or failed internal processes, ppl and systems or from external events |
operations risk |
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prime mover in identifying sources of risk in the banking industry |
Basel Committee on Banking Supervision (BCBS) |
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BCBS's risk evaluation system |
Basel Capital Accord |
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name 3 types of credit risk
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-issuer risk
- counterparty risk - settlement risk |
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the risk that an issuer may default on its obligations. |
issuer risk |
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the risk that an institution defaults on obligation to a trade counterpart prior to trade settlement |
counterparty risk |
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the risk that the completion or settlement of a transaction fails to take place as expected |
settlement risk |
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the risk of loss of earning or capital arising from changes in the value of financial interments |
market risk |
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factors that may contribute to operational risk
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-internal & external fraud
- theft - total or partial interruption of systems or processes |
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operational risk sub categories |
transaction-processing risk legal risk reputational risk |
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the risk that an error in the processing of a transaction will cause a direct or indirect loss to the firm |
transaction-processing risk |
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the risk that a contract is unenforceable, resulting in loss |
legal risk |
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the risk that an act conducted by a firm or one of its employees damages the reputation of the firm, resulting in direct or indirect loss |
reputational risk |
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risk of material loss, liability or repetitional damage resulting from failure to comply w the requirements of financial services |
regulatory risk |
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the network mgmt team within bank will hold primary responsibility for conducting risk assessments of: |
- market infrastructure - sub custodians employed - any other service providers to which it may outsource functions |
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factors to be taken into account when conducting risk reviews of custodians
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- bank's credit rating & balance sheet - contingency planning - track record - technological capabilities - communication & reporting - market info and data flows - staff expertise - transparency and integrity |
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rule that US investment companies can hold securities with any custodian that meets the SEC's eligible foreign custodian criteria |
SEC Rule 17 f-5 |
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before holding assets w foreign investors, a US investment co must consider: |
-access to books and records - recovery of assets - ccy convertibility - expropriation of assets (probability that investors assets may be confiscated/frozen) |
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Rule that specifiers any depository that is employed by a US investment company to hold its assets my be an Eligible Foreign Depository |
Rule 17 f-7 |
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criteria required to be an eligible foreign depository |
- must be a national or transnational centre for handling securities - must be subject to periodic audits by the regulatory authorities or ind accountants - CSD must apply equal safekeeping treatment - must maintain register that details the assets held on behalf of each depo participant |
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who issued reporting guidelines to assist directors needed to verify that their organisations have strong internal controls in place for audit and assurance. |
ICAEW |
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guidance that provides an independently audited record of the internal controls employed by investment services companies |
AAF 01/06 |
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internationally recognised audit standards developed by AICPA and IAASB |
SSAE 16 & ISAE 3402 |
