An Example of Market Priced Capitalisation Metrics: the SPAN Method
Posted in Analysis, Market Comments on Sep 14th, 2010
This article explores the potential for pure market pricing of minimum banking capitalisation ratios. In particular, it reviews the track-record of existing commodities exchanges calculation methods, such as CME’s SPAN system in determining safe capital adequacy buffers. The post follows through from the recent BSCB announcement on minimum tier-one capitalisation requirements.