Baringa Partners’ Dr Oliver Fleming and Matt Clay examine the implications and the Fundamental Review of the Trading Book consultation.
Already besieged by an onslaught of impinging regulation,
perhaps the last thing that any senior banking executive wanted
to see rolling off the Basel presses was a consultation paper
that included the word 'Fundamental’ in its
However, as has been demonstrated repeatedly over the past
36 months, the current era of banking regulation is very seldom
reflective of banks wishes. True to form, on May 3 we saw the
publication of a Basel Committee on Banking Supervision (BCBS)
consultative document delivering a 'Fundamental Review of the
Trading Book’ (FRTB).
Such is the level of regulatory fatigue permeating the
industry that it would be easy for financial institutions
simply to file away the paper with a view to assessing the
implications when legislative discussions have commenced.
However, the proposals contained in the FRTB have such
strategic and operational significance for banks with extensive
trading operations that failing to give it due consideration at
the consultation stage could have serious competitive
repercussions when the industry moves towards
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