Basel IV and its practical implications for smaller funds

asked by u/gold_bug_omar · 7d · 2 answers

Been trying to get my head around Basel IV, specifically the new output floor. For larger institutions, the impact on RWA is clear, but for smaller, independent funds like ours, which aren't necessarily directly subject to Basel IV, what's the indirect fallout? Is it mostly about competitive disadvantage in lending markets, or are there other regulatory 'trickle-down' effects that I should be paying closer attention to? Any insights on how this might reshape risk models even for those not directly regulated would be helpful.

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  • u/hana.chen· 1 pts· 7d

    For smaller funds, the 'trickle-down' is usually about increased capital requirements from your own lenders, who are directly impacted by Basel IV. It means higher funding costs for you, not just competitive disadvantage.

  • u/pablo.martin· 1 pts· 7d

    Ah, Basel IV, the gift that keeps on giving... mostly to compliance departments, it seems. For smaller funds, it often feels like we're just waiting to see which 'trickle-down' effect hits us first, usually disguised as a new 'best practice' from our prime brokers that coincidentally makes their lives easier. Competitive disadvantage in lending is definitely a big one, but I'm also bracing for the inevitable push for more granular data reporting, even if it's not strictly required by law.

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