Core Viewpoint - The National Financial Supervision Administration has revised the "Guidelines for Market Risk Management of Commercial Banks" to enhance capital regulation and improve market risk management levels in commercial banks, effective immediately upon issuance [2]. Group 1: Definition and Scope of Market Risk - The new "Measures" redefine market risk, excluding interest rate risk related to bank books, which is now treated separately [2][3]. - The previous guidelines, in effect for over 20 years, required updates to align with evolving banking practices and the implementation of the "Capital Management Measures" [2]. Group 2: Management and Governance Structure - The "Measures" emphasize the need for a clear governance structure for market risk management, outlining the responsibilities of the board, supervisory board, and senior management [3]. - It is highlighted that the business functions of commercial banks should remain independent from market risk management functions to avoid potential conflicts of interest [4]. Group 3: Compensation and Incentives - The "Measures" stipulate that the compensation of market risk management personnel should not be linked to direct operating profits, preventing incentives for excessive risk-taking [5]. - The board and senior management are advised to avoid compensation structures that encourage short-term profit focus at the expense of long-term risk considerations [5]. Group 4: Risk Management Requirements - The "Measures" detail comprehensive requirements for market risk management, including risk identification, measurement, monitoring, control, and reporting [5]. - There is a call for improved internal model definitions, model management, and stress testing to align with current market risk measurement frameworks and practices [5].

Core Viewpoint - The Financial Supervision and Administration Bureau has issued guidelines requiring commercial banks to perform daily market value re-evaluations of trading book instruments [1] Group 1: Regulatory Requirements - Commercial banks are mandated to conduct daily market value re-evaluations of their trading book instruments [1] - The re-evaluation process must be managed by departments independent from the business operations, such as risk management or financial accounting [1] - Pricing factors used for market value re-evaluation should be sourced from channels independent of the business operations or verified independently [1]

Core Viewpoint - The National Financial Supervision Administration has issued the "Market Risk Management Measures for Commercial Banks," emphasizing the importance of market risk as a primary risk faced by commercial banks and the board's ultimate responsibility for managing it [1] Group 1 - The board of directors of commercial banks must recognize market risk as one of the main risks [1] - The board is responsible for ensuring the establishment of a risk culture that aligns with market risk management requirements [1] - Commercial banks are required to effectively identify, measure, monitor, and control the market risks associated with their business operations [1]