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The large exposure regime is a key aspect of regulation of the financial industry. It is in place to ensure that banks and other regulated entities diversify their exposures in order to limit the impact of a failure of a counterparty or group of counterparties on an institution.
The global financial crisis highlighted the need for a stronger supervision in this field which the EU met by issuing the directive 2009/111/EC. To start this article will provide an overview of the regulatory frameworks/guidelines on European level and its transposition into national law. The second part will deal with changes resulting from the new regulation and in particular the new definition of connected clients. Finally, the third part will cover challenges banks will face while implementing...
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