Basel trading book review triggers fight for modelling freedom
Regulators have embarked on a wholesale review of the way trading book exposures are capitalised. The industry responded, and continues to lobby – but is it getting anywhere? Laurie Carver reports
A senior risk manager at a US bank recalls the first time regulators and industry representatives met, in November 2010, to sketch out a replacement for Basel 2.5 and its modular approach to trading book capital requirements. His early enthusiasm did not last long.
“We were so excited. We were going to rationalise everything, get rid of this patchwork of measures, do things properly. When we got in there we were quickly set straight. The regulators had a completely different agenda – it wasn’t
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