SEC raises eyebrows over BIA and AMA

NEW YORK – US investment banks implementing the Securities and Exchange Commission’s Basel II framework will be on the basic indicator (BIA) approach for the time being, according to an SEC official. In contrast, large banks in the US are only permitted to do the advanced measurement approach (AMA) when they implement Basel II in January 2008.

Matthew Comstock, a branch chief in the division of market regulation at the SEC, raised eyebrows at the OpRiskUSA conference in New York when he indicated that large broker-dealers such as Bear Stearns, Morgan Stanley, Merrill Lynch, Goldman Sachs and Lehman Brothers would be on the simplest of approaches for op risk. "I’m not sure it’s a lighter touch," he said, defending the plans. "Ultimately we are following Basel II and firms will move to the AMA. I am sure we will look to the Fed rules in