Banks face tougher capital requirements on swaps, bonds, and other securities that they intend to trade, as global regulators tighten market-risk rules for the second time since the financial crisis.
The Basel Committee on Banking Supervision, whose members include the U.S. Federal Reserve and the People's Bank of China, said updated rules published on Thursday will result in a weighted mean increase of about 40 percent in trading-book capital charges. The revised framework boosts the share of banks' risk-weighted assets produced by market risk to nearly 10 percent, from about 6 percent under existing rules, the Basel group said in a statement.
The overall capital burden on banks imposed by the Fundamental Review of the Trading Book, which takes effect in 2019, is nevertheless lower than was produced by earlier proposals, the Basel Committee said. The impact on specific asset classes and business lines is likely to be uneven and could hit some banks harder than others, even making some trading desks unviable.
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