The Basel Committee on Banking Supervision (BCBS) has been ruminating on changes to prudential rules for trading activities at banks.  In October of this year, BCBS released its second consultation paper.  It follows the first document released in May 2013, and has definitive views of how trading books should be regulated.

The changes will be far-reaching and significant.  The phrase “Fundamental Review…” in the title of consultation paper is indeed appropriate.  Market risk managers need to be thinking about the proposal, and what will be required in the next few years as the changes hit.  Some banks may even need to debate the value of continuing their trading activities.

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