Introduction
In April 1993, the Basel Committee on Banking Supervision ("the Committee") issued for comment by banks and financial market participants a package of supervisory proposals dealing with netting, market risk, and interest rate risk. One of these proposals, "The supervisory treatment of market risks", set out a framework for applying capital charges to the market risks incurred by banks, defined as the risk of losses in on- and off-balancesheet positions arising from movements in market prices. The Committee has carefully considered the comments received and has made a number of revisions to its earlier proposal. The Committee's revised proposal consists of this cover note, a planned Supplement to the Basle Capital Accord of July 1988 and a discussion paper analysing the issues which arise in relation to the use of banks' internal risk measurement systems as a basis for applying capital charges.