MFA submitted a comment letter to the Basel Committee on Banking Supervision’s (BCBS) proposed guidelines for counterparty credit risk (CCR) management.
MFA supports the BCBS’s goal of establishing robust global standards for CCR management but expresses concern that the current draft:
- Imposes overly prescriptive requirements that increase costs for financial end users, such as pensions, foundations, and endowments, without improving CCR management.
- Limits flexibility and increases the risk of disclosing sensitive proprietary information.
- Undermines efficiency in capital markets by forcing a one-size-fits-all approach that does not allow banks to customize their CCR management based on individual counterparty or portfolio needs.
The letter argues that the failure of Archegos Capital Management, which is the underlying rationale for the Consultation, is not relevant to private funds. MFA recommends that BCBS adopt more flexible guidelines that allow banks to tailor their approach to CCR management, particularly regarding diligence and monitoring requirements.
