Basel Seeks Tougher Boundary Between Banking, Trading Books

Banks face tougher rules on how they differentiate between assets they keep in their banking and trading books, making it harder to dodge capital rules, under proposals published by the Basel Committee on Banking Supervision today.

Lenders would have to give regulators evidence of buying and selling of securities in their trading books and face limits on their ability to shift assets between books under the plan. The risk of credit crunches would also need to be taken into account in calculations of how much cash they should keep in reserve against trading losses.