The Basel Committee’s plans to force banks to
hold more capital for assets in their trading books has been
met with strong opposition by the industry.
The committee’s proposed rules, the Fundamental
Review of the Trading Book (FRTB), is the latest attempt to
toughen treatment given to securitised debt.
The rules, which are due to be finalised by December this
year, and in place by January 2019, could make secondary
trading in securitised products unprofitable for
broker-dealers. That conflicts directly with the European
Commission’s plans to
grow the securitisation market.
"The EC has a seat at Basel so they must be aware of the
potential impact on securitisation," said Michael Lever, head
of prudential at the Association for Financial Markets in
"I can’t speak for them, but when they consider
implementing this in Europe they have to consider their overall
institutional objectives such as the...