Wall Street Banks Have Basel’s Ear in Pushback on Market Risk
By Jesse Hamilton and Silla Brush

Wall Street is used to getting the opportunity to influence bank rules before they are unveiled. Now financial firms are getting the chance to argue that a key capital requirement should be softened even after it was supposed to be finished. A global panel of regulators that includes the U.S. Federal Reserve and Bank of England will let the world’s largest banks provide additional feedback on a rule released in January that forces lenders to have sufficient capital to back bonds, derivatives and other securities they intend to trade, according to three people with knowledge of the matter. The rule to be discussed at the April gathering is known as the Fundamental Review of the Trading Book. One of the people described it as unusual for Basel officials to meet with bankers to talk about a just-completed regulation. The gathering in London won’t be banks last chance to influence regulators. Because the Fed and other authorities must implement the rule in each of their individual countries, lenders will get another crack at lobbying. “In the absence of implementing domestic rules, there is a bit of a window of opportunity for change,” said Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics. Still, she said a change would require “quick action by Basel, for which they are not well known.”