Trading Book

The 2008 financial crisis highlighted the need to review capital requirements for trading book activities.

The Basel Committee responded by issuing a set of revisions to the market risk framework, known as “Basel 2.5”. However, the Basel Committee acknowledged the need for a more full-fledged and longer term fundamental review of the capital framework for trading activities and published the long-awaited conceptual paper – the Fundamental Review of the Trading Book. The proposals reflect the Basel Committee’s objective of achieving a regulatory framework that can be implemented consistently by supervisors and which achieves comparable levels of capital across jurisdictions. GFMA is working with other trade associations to ensure that any new market risk framework allows for flexibility in implementation and is appropriately risk-adjusted.

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