EU urged to recognise different op risk profiles of investment firms

MONTE CARLO - The European Union's plans to make investment firms as well as banks reserve capital against operational risk must acknowledge that one size does not fit all firms in the financial services industry, a leading European financial regulator argued in early July.

Howard Davies, chairman of the UK's Financial Services Authority (FSA), said the EU should avoid a simple extrapolation of the proposed Basel II bank capital adequacy rules to investment firms.

He added it may be necessary to consider a further breakdown of the business lines proposed for measuring operational risk in Basel II in order to allow for a more risk-sensitive operational risk charge based on different scaling factors for different categories of business.

Basel II will determine how

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