Guidelines on the management of operational risk in market-related activities

Status: Final and translated into the EU official languages

The Guidelines introduce principles and implementation measures for the identification, assessment, control and monitoring of operational risk in market-related activities. In particular, they aims to highlight supervisory expectations relating to specific arrangements, procedures, mechanisms and systems in trading areas that could prevent or mitigate operational risk events.

Guidelines on the management of operational risk in market-related activities

Guidelines on the management of operational risk in market-related activities

12 October 2010

The Committee of European Banking Supervisors (CEBS) has published today its guidelines on the management of operational risk in market-related activities.

Following the publication of CEBS's high level principles on Internal Governance (CEBS Guidelines on the Application of the Supervisory Review and Evaluation Process- Section 2), its high level principles on risk management and its high level principles on remuneration policies, CEBS now introduces more specific principles and implementation measures for the identification, assessment, control and monitoring of operational risk in market-related activities.

In particular, this paper aims to highlight supervisory expectations relating to specific arrangements, procedures, mechanisms and systems in trading areas that could prevent or mitigate operational risk events.  CEBS principles are divided into three different parts, addressing the management of operational risk in market-related activities from three different angles:

• Governance mechanisms - principles 1-5;
• Internal controls - principles 6-15;
• Internal reporting systems - principles 16-17.

While these guidelines are relevant to all institutions, the principle of proportionality should be taken into account in their application.

In developing these guidelines, CEBS benefited from views gathered from market participants. Input was provided through the industry's responses to the two public consultations CP35 and CP35rev, published in December 2009 and June 2010 respectively) and through a public hearing organised in March 2010. CEBS has considered the feedback received and has revised its initial proposals in order to address the main issues raised by market participants (see feedback document).

CEBS expects its members to implement the guidelines on market-related activities by 30 June 2011.

Press contacts:

Franca Rosa Congiu

E-mail: press@eba.europa.eu - Tel: +44 (0) 207 382 1772