The bank may use the simplified alternative to the standardised approach only with supervisory approval and oversight; it is intended for smaller or simpler trading books, and supervisors may consider whether the bank is not a G-SIB, uses the IMA for no desk and holds no correlation trading positions (MAR11.7). Supervisors may require the full standardised approach even where these indicative criteria are met, if risks in a class are complex or sizeable (MAR11.7(2)). Under the approach, the bank must separately calculate interest rate, equity, FX and commodity capital, each including the non-delta option risks treated in MAR40.74 to MAR40.86, and sum them after applying scaling factors of 1.30 to interest rate, 3.50 to equity, 1.90 to commodity and 1.20 to FX risk (pairing confirmed in the January 2019 market risk standard) (MAR40.1-40.2); RWA equal capital multiplied by 12.5 (MAR40.1). For interest rate risk, the bank must compute specific risk for each security and general market risk separately, with specific risk offsetting permitted only for matched positions in the identical issue (MAR40.3-40.5). Repo or lent securities remain treated as owned by the lender (MAR40.3 footnote).
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.