The Institute of International Finance, the Global Financial Markets Association and the International Swaps and Derivatives Association have published a joint statement on the fundamental review of the trading book framework issued by the Basel Committee on Banking Supervision (BCBS). Whilst being supportive of the BCBS’s work during the fundamental review of the trading book, the trade associations made the following comment:

“Overall, we are concerned that despite the BCBS’s reiteration not to significantly increase overall capital requirements, trading book capital will increase by 40% under the new rules based on the BCBS’s impact assessment. We worry that the rules may have a negative effect on banks’ capital markets activities and reduce market liquidity. Further impact assessment needs to be run to assess if the gap between the standard and internal models based capital outcomes is reasonable, considering the BCBS’s future work on standardised floors.”

View Trade associations’ statement on BCBS fundamental review of the trading book framework, 14 January 2016