Banks see clash in Basel's trading and banking book work

Draft rules on interest rate hedging could set back arbitrage fix, critics claim


Banks are warning that the Basel Committee on Banking Supervision's draft rules on banking book interest rate hedges could encourage the kind of behaviour a different working group is trying to eradicate.

The committee's December 2014 Fundamental review of the trading book (FRTB) proposal imposes new restrictions on so-called internal transfers of risk between the banking book and trading book. Banks claim this will make hedging more costly and could incentivise the industry to keep risk in the

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