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   Pre-Commitment Capital Requirement
   















 

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Pre-Commitment Capital Requirement

A proposal to let a financial institution set its own capital requirement for a line of business at the beginning of a fiscal period. If subsequent risks (losses) indicate that this capital reserve was too small, the institution would face substantial penalties. This proposal stems from growing recognition of the difficulty of setting capital requirements that fit all firms.

To find out about the current status of capital for market risk please read "Key Risk Concepts: Market Risk"

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