QIS 3: Banks can use internal pricing for standardised approach

BASEL - Banks participating in the QIS 3 survey can use internal pricing methods to allocate gross income to different business lines for the standardised approach to measuring operational risk in the Basel II bank accord, global banking regulators said in early November.

But the regulators said it was still to be decided whether internal pricing would be allowed for the standardised approach in the final Basel II rules when they come into effect for major banks in late 2006.

Internal pricing in the op risk standardised approach prompted one of the most frequently asked questions (FAQs) arising from the issue on October 1 QIS 3, the third Basel II quantitative impact study. QIS 3 is seeking information from 265 banks in some 50 countries on how the complex