Hong Kong Regulations

BANKING (CAPITAL) RULES - SECT 25

Authorized institution may apply for approval to use STO approach or ASA approach to calculate its operational risk

(1) An authorized institution may apply to the Monetary Authority for approval
to use the STO approach or ASA approach to calculate its operational risk.

(2) Subject to subsections (3) and (4), the Monetary Authority shall determine
an application under subsection (1) from an authorized institution by—

   (a)  granting approval to the institution to use the STO approach or
        ASA approach to calculate its operational risk; or

   (b)  refusing to grant the approval.

(3) Without prejudice to the generality of subsection (2)(b), the Monetary
Authority shall refuse to grant approval to an authorized institution to use
the STO approach or ASA approach to calculate its operational risk if any one
or more of the requirements specified in Schedule 4 applicable to or in
relation to the institution are not satisfied with respect to the institution.

(4) The Monetary Authority shall not grant approval to an authorized
institution to use the ASA approach to calculate its operational risk unless
the institution demonstrates to the satisfaction of the Monetary Authority
that the use of the ASA approach would provide a more accurate assessment of
the degree of operational risk to which the institution is exposed than would
the use of the STO approach.