Reuters: Regulatory News: Bank regulators propose tougher trading book rules

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Bank regulators propose tougher trading book rules Oct 31st 2013, 10:52 Share this Email Print Reprints LONDON | Thu Oct 31, 2013 6:52am EDT LONDON Oct 31 (Reuters) - Banks using bespoke models for determining how much capital they hold to cover trading book risks should also use a standardised approach as a backstop, global regulators said on Thursday. The Basel Committee of banking supervisors from nearly 30 countries published a second round of consultation on reforming how risks on trading books could be added up after finding wide discrepancies among banks. Hawkish policymakers in Britain and the United States have said that Basel's current system of using in-house models to assign weightings to risky assets to determine capital levels is too complicated and easily gamed. "This 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," the committee said in a statement. The committee is also considering the merits of introducing the standardised approach as a floor or surcharge to the models-based approach. "However, it will only make a final decision on this issue following a comprehensive quantitative impact study, after assessing the impact and interactions of the revised standardised and models-based approaches," the committee said. Link this Share this Digg this Email Reprints

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