Azerbaijan's Central Bank approves new rules for managing market risks in banks

The Board of the Central Bank of Azerbaijan (CBA) has approved the "Rules for Market Risk Management in Banks," Report informs.

The corresponding decision was signed by Aliyar Mammadyarov, first deputy chairman of the CBA and acting governor of the bank.

According to the document, banks are required to develop a market risk management system taking into account the nature and volume of transactions, business specifics, operating conditions, and their own risk profile. The system must be integrated into the overall risk management process and cover at least interest rate risk, currency risk, capital risk, and commodity risk.

The development of the market risk management system and the assessment of its effectiveness are the responsibility of the credit institution's Supervisory Board.

The system should also comply with the bank's internal policies and include requirements for market risk management policies and procedures; market risk measurement; the Interest Rate Risk in the Banking Book (IRRBB) indicator; stress testing; and market risk monitoring and reporting.

The rules apply to all structural divisions of banks, operations within Azerbaijan and abroad, as well as subsidiaries.