23. The April 1995 proposal introduced specific capital charges to be applied: (i) to the current market value of open positions (including derivative positions) in interest rate related instruments and equities in banks' trading books, and (ii) to banks' total currency and commodities positions in respect of foreign exchange and commodities risk respectively. The proposals for interest rate related instruments and equities were based upon a "building-block" approach which differentiates requirements for specific risk (i.e., the risk of loss caused by an adverse price movement of a security due principally to factors related to the issuer of the security) from those for general market risk (i.e., the risk of loss arising from adverse changes in market prices).

24. For the most part, only minor changes have been made to the April 1995 proposal for the standardised method. In the section on interest rate risk, the Committee has provided more clarification as to so-called pre-processing techniques, which are intended for large swap books, and as to how these techniques are to be implemented. This is discussed in greater detail in Section A.1, paragraph 22, of the Amendment to the Accord.

25. The principal changes to the standardised methodology concern the section on options, where the April 1995 proposal has been simplified. The Committee is aware of the fact that many banks, particularly in respect of options, need an extended transition period to move to value-at-risk models. The "delta-plus method" and the "scenario" approach are intended to provide reasonable "stepping stones" to the full use of internal models. However, the Committee will keep these issues under review and plans to continue to monitor closely industry practice for measuring options risk.