The Short- and the Long-Term Ramifications of FRTB

The solution to FRTB is not as simple as adding hardware. With the right system in place early, this might not even be necessary. The advantages of being an early adopter are clear. The first ones ready are in a stronger position—they have a head start in assessing the business impact of the regulation and optimizing desk structures. There are also the unintended consequences of FRTB. Introduced as a risk management tool, the regulation may also impact strategic decisions around business objectives and expansion. FRTB is a key milestone in a long list of regulations banks need to implement that all trend toward increasing the cost of trading. To remain competitive, banks need to be able to assess the best counterpart and best route for trading at pre-deal level.