Part III Investment Banking, 12 The Trading Book
- Regulation of banks — Equity — Options — Derivatives — Bonds — Basel 1 — Basel 2 — Currency — Undertakings for Collective Investment (UCIs)
12.01 Market risk was a relative latecomer to the Basel framework—although the original Accord was signed in 1988, it was only in 1996 that the amendment to incorporate market risks was implemented. The original Accord dealt only with credit risk: the working assumption being that bank assets would typically be loans. In strict theory, of course, all financial assets are credit assets; the point being that a person who has lent £100 to company X is, in credit terms, in the same position as a person who owns a £100 security issued by company X. However—again in...