it will be possible to carry out trade operations between the two countries with terms of up to 360 days. payments of services related to trade ( for example, freight and insurance ) can also be made in own currencies. operations may be contracted on the basis of an exchange rate negotiated with financial institutions or the sml rate itself, calculated based on the average real - dollar rate published daily by the central bank of brazil, and the argentine reference peso - dollar rate. at the closing of both markets, the sml rate will be announced daily. financial settlement of operations carried out through the system will take place in three business days ( d + 2 ). banking institutions that have reserve accounts at the brazilian central bank may be accredited to operate in the system. authorization to operate on the exchange market is not a prerequisite. the sml is a highly promising initiative for small and medium businesses that have less access to derivative mechanisms to neutralize foreign exchange risk. at the same time, large companies have also shown interest in the system, primarily those that already have mature operations in the two economies. there is no doubt whatsoever that the system we have just inaugurated will not only stimulate trade transactions between brazil and argentina but also enhance competitiveness in both countries. this initiative is a first and important step forward toward greater integration of our economies and of mercosul. congratulations to all of those who have played a role in making this historic moment feasible. thank you.

integrity issues like consistency of data over long periods, accuracy and so on. institutions are already mapping events to operational loss categories and building warehouses of operational risk data for implementation of advanced measurement approaches. many data availability and reliability issues still need resolving. an internal loss experience for the important ( low frequency, high severity ) operational risk types is rare and any relevant data are likely to be in the form of risk self - assessments and / or external loss experiences. extreme events and stress testing : one of the key roles of the risk management process is to manage extreme events, such as those associated with the tails of statistical distributions and could have probability of occurrence as low as one percent. these are low probability but high loss instances associated with extreme operational events such as rogue trading or accounting fraud. the importance of stress testing to assess the impact of not only these events but also the impact of various scenarios is engaging the attention of risk management personnel, academicians and bankers alike risk based capital and back - testing : an important reason as to why the quantitative techniques have received so much attention, is not because of the intellectual satisfaction it can give to the academician but a rather mundane reason that it can be used to convince the regulator that given the risks as measured by these techniques the amount of capital required could be far less than that may be stipulated under broad brush, standardized techniques. an immediate linkage between the risk models, the quantum of risk that is measured by use of these models and the capital that is required to support these risks immediately emerge. estimates of capital being sufficient to meet the risk can be only as good as the models are and the credibility of the models would ultimately depend upon their actual performance. back testing the models to gauge and reduce the variance between the deviations of the actual numbers from those projected are largely relied upon to give a degree of comfort to both management of banks and supervisors alike. ii. indian perspective internationally, there has been a continuous coordinated effort under the aegis of institutions like the bis to evolve best practices in risk management in banks and these have gradually come to be accepted as some sort of international standards for banks across the world to benchmark themselves to. at the regulatory and supervisory level also, there has been an effort to achieve convergence to the best practices set out by the bcbs after duly allowing for national characteristics and feasibility. banks have responded to this initiative with varying levels of effectiveness. it was in october 1999, that the reserve bank issued guidelines on risk management in banks setting out its