in June 2004 the Basel Committee on Banking Supervision has published its recommendation for the capital adequacy of credit institutions, the principles of which have been adopted and partly expanded by the European Union with Directives 2006/48/EC and 2006/49/EC on the basis of a joint decision by the European Parliament and the European Council. The required amendments to the Hungarian legislation were implemented in 2007 and in the first half of 2008. The new regulations embodied in the advanced approaches – iRB, AMA – represent a new challenge for the affected institutions – credit institutions and investment firms – and the supervisory authorities, as well as a new type of regulatory approach and a new type of thinking framework for the legal systems that relied on detailed regulation. This framework specified primarily the results to be achieved and not the means by which they should be achieved, which beside the novelty of the approach also raises issues related to transparency and neutrality of competition. As a further factor it is also to be considered that the directives are being applied in member states that operate within often significantly different institutional and economic frameworks and employ different supervisory approaches.

Within the above system of conditions, the convergence of national regulations and their supervisory interpretations is of special importance as a guarantee for the formulation of a regulatory and supervisory environment that is neutral with regard to competition, permeable for institutions from a regulation aspect, that does not allow the possibility of regulation arbitrage, but at the same time that does not pose a multiple burden. This task is performed by supervisory colleges for specific individual international banking groups, and horizontally by the working groups of the Committee of European Banking Supervisors (CEBS).

Lacking detailed provisions the transparency of supervisory approaches and requirements is of particular significance, also stressed and formulated by the directives as a requirement for supervisory authorities. This is why the HFSA decided that it was necessary to publish Guidelines to provide a systematic presentation of the steps in the validation process, the substantial interpretation of the rules, the position of the HFSA and the supervisory requirements related to validation. The first version of the Validation Guidelines was published in April 2006, before domestic legislation was formulated and before practical experience was available. Not only has domestic legislation been formulated in the period since, but a significant body of knowledge has also been accumulated and a number of issues have been clarified in international cooperation, in the practical experience that was gained and through the challenges that were faced in pre-validation and validation examinations that have taken place and as a result of professional consultations. As a result, it became necessary and possible to update the Guidelines to incorporate the experience gained and to implement the necessary corrections and additions.

The revised Validation Guidelines contain the relevant supervisory interpretations and requirements for the implementation of the advanced approaches in an identical conceptual framework and structure as earlier. Changes are presented as corrections and additions; there have been no changes to the fundaments of the HFSA approach.

The text continues to include references to document lists found in the annex, which continue to serve to assist the interpretation of the requirements related to the advanced approaches and the definition of documents to be attached to an application for authorisation. Documents, for which the text contains a specific document list reference, constitute parts of an application for authorisation and are to be submitted to the HFSA together with the application. Documents not referenced must be available at the premises of the institution applying for an authorisation to use the advanced approaches, and should be presented if requested by the HFSA.