Corporate Advisory

Basel issue new Trading-book rules

Banks face tougher capital requirements on swaps, bonds and other securities that they intend to trade, as global regulators tighten market-risk rules for the second time since the financial crisis.

Some of the world’s biggest banks will have to set aside a combined $77 billion in extra capital from 2019 under new trading book rules unveiled by global regulators hoping to prevent another financial crisis.

In the latest sign of how regulators are being more accommodative as policymakers emphasise the need to help economies grow, the Basel Committee of banking supervisors has eased its initial proposal for a hike in capital requirements.

Banks had warned that overly burdensome demands would make trading uneconomic, crimp lending and thin already stressed liquidity in markets.

The Basel Committee on Banking Supervision, whose members include the U.S. Federal Reserve and the People’s Bank of China, said updated rules will result in a weighted mean increase of about 40 percent in trading-book capital charges. The revised framework boosts the share of banks’ risk-weighted assets produced by market risk to nearly 10 percent from about 6 percent under existing rules, the Basel group said in statement.

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