The Swiss Financial Market Supervisory Authority FINMA is publishing further guidance in the context of the COVID-19 crisis. The exemptions and clarifications related to its supervisory practice concern institutions authorized to apply the model approach to market risk as well as an extension of the timeframes for supervised institutions to introduce new rules for derivatives trading.
In its Guidance 04/2020 FINMA announces further exemptions in the context of the COVID-19 crisis. Firstly, FINMA is granting exemptions in the model approach to market risk intended to mitigate the volatility-induced pro-cyclicality. These exemptions concern the number of backtesting exceptions that are relevant to the calculation of capital adequacy and apply until 1 July 2020. Secondly, FINMA is extending the timeframes in derivatives trading for the implementation of the margin requirements for non-centrally cleared OTC derivatives for certain counterparties by one year.