Basel 2.5: US ratings workaround too punitive, banks complain

Securitisations suffer in draft rules that avoid use of credit ratings - a Dodd-Frank Act requirement

US regulations

Draft trading book capital rules published by US regulators on December 7 are insensitive to risk, banks claim, and would leave the US industry facing capital requirements for some assets – particularly securitisations – that are higher than those produced by the corresponding international rules, known as Basel 2.5.

“In many cases the measures are heavily risk-insensitive – in some they are more punitive compared with the Basel 2.5 risk weights, in others more favourable – and this needs to be

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