[13556]
May 30, 2001
TO: INTERNATIONAL COMMITTEE No. 37-01
RE: ICI COMMENT LETTERS ON PROPOSED CAPITAL ADEQUACY STANDARDS
On January 16, 2001, the Basel Committee on Banking Supervision undertook a second
round of consultations on a revised capital adequacy framework for banks, banking groups,
and holding companies that are parents of banking groups.1 The Committee proposed to
impose capital requirements for operational risk for the first time and to calculate those
requirements based on operational risk of each business line, including asset management. In
connection with the Basel Committee proposals, on February 5, 2001, the Commission of the
European Union also launched a second round of consultations on a new capital adequacy
framework.2 The Commission’s revised capital adequacy standards would complement the
work of the Basel Committee and would apply to banks and investment firms in the European
Union.3
The Institute was concerned that the proposed new capital standards that would take
operational risks of asset management into consideration could have the unintended
consequence of setting a capital adequacy standard for the asset management industry
generally. Accordingly, the Institute has submitted comment letters, copies of which are
attached, both to the Basel Committee and to the EU Commission expressing the concerns of the
industry.
Jennifer S. Choi
Assistant Counsel
Attachment
1 See Memorandum to International Committee No. 28-01 (Apr. 11, 2001).
2 See Memorandum to International Committee No. 12-01 (Feb. 21, 2001).
3 The revised Capital Adequacy Directive (CAD) also may affect management companies of UCITS funds for
the first time if the UCITS amendments that reference the requirements for capital charges based on
expenditures in the CAD are adopted.
2Attachment (in .pdf format)