Provision of Risk Margin for Adverse Deviation (PRAD) Models - Characteristics, Pros and Cons

1. Many countries in the region are using the RBC (Risk Based Capital) approach to determine the capital requirements.

2. The PRAD shall be determined such that the overall valuation of guaranteed liabilities secures 75% sufficiency.

3. Why do we need risk margins? As we progress, we are facing an Increased uncertainty in the current estimate of liabilities and its trends. 

4. Different countires have different names for risk margins.

Capital Adequacy Ratio for Banks and Insurers

1. The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted assets ratio for a bank is usually expressed as a percentage. The current minimum of the total capital to risk-weighted assets, under Basel III, is 10.5%.

WTO's Report on Non-Tariff Measures and ASEAN Tackling Trade Barriers

1. Non-tariff measures that can potentially affect trade in goods present the multilateral trading system with a basic policy challenge – how to ensure that these measures meet legitimate policy goals without unduly restricting or distorting trade. The same challenge applies to measures that can affect trade in services.

2. The motivations for using non-tariff measures and services measures have evolved, complicating the policy panorama, but not changing the core challenge of how to manage the tension between public policy goals and trading opportunities.

3.  While intra-Asean trade has been soaring around 25 per cent, it is far below what the European Union has achieved, which is at 63 per cent of the total trade in 2015, whereas the North American Free Trade Agreement (Nafta) registered almost 50 per cent of the intra-group trade of its total exports in the same year

Valuation in Derivatives Markets and adopting Multiple Discount Curves

1. Derivatives are Financial transaction whose value depends on the underlying value of the reference asset concerned.

2. A contract that specifies the rights and obligations between two parties to receive or deliver future cash flows (or exchange of other securities or assets) based on some future event.

3. Historically, all derivative valuation was performed assuming a single standard discount curve (LIBOR). This methodology was based on the belief all market participants had equal credit risk. However during the crisis, the assumption that each institution had equal credit risk was clearly invalidated.