The Office of the Superintendent of Financial Institutions has published its criteria for banks that use the standardized approach to operational risk under the new Basel capital rules.

Under the new Basel framework, an institution wishing to implement the “standardized approach” to operational risk must meet certain qualifying criteria to the satisfaction of its national supervisor in order to be able to use this approach, OSFI notes in a letter.

It has published a paper that provides clarification of OSFI’s expectations with respect to the qualifying criteria for the approach and their application to smaller deposit-taking institutions with less complex operations. “Institutions should refer to these clarifications when completing the Operational Risk Self-Assessment Template for the Standardized Approach,” it says.

The positions outlined in this paper will be incorporated into the next draft of the Capital Adequacy Requirements guideline, OSFI adds.

Comments are requested by January 27, 2006.