Global regulators on Thursday proposed new measures to toughen up the regime that governs capital requirements for banks’ trading books.
The Basel Committee on Banking Supervision issued a consultation paper proposing that banks use a standardised approach to determine how much capital they need to hold to cover trading book risks, as a backstop to calculations based on their own internal models.
The consultation document comes after regulators identified big discrepancies in the way risks in trading books are assessed.
In a statement the Basel committee said it wanted to see a “strengthened relationship between the standardised and the models-based approaches”.
This, it went on, is achieved by establishing a “closer calibration of the two approaches, requiring mandatory calculation of the standardised approach by all banks and requiring mandatory public disclosure of standardised capital charges by all banks, on a desk-by-desk basis.”
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