Entire Section

  • PIB A2.1.3 PIB A2.1.3

    An Authorised Firm must include in its Trading Book, subject to the Rules on trading intent and hedging Non-Trading Book Exposures:

    (a) each proprietary position in a Financial Instrument, commodity or commodity derivative which is held with trading intent as detailed in PIB Rule A2.1.5(3);
    (b) each position arising from Matched Principal broking and market making;
    (c) each position taken in order to hedge another element of the Trading Book;
    (d) each Exposure due to a repurchase agreement (repo), or Securities and commodities lending, which is based on a Security or commodity included in the Trading Book;
    (e) each Exposure due to a reverse repurchase agreement (reverse repo), or Securities and commodities borrowing transaction included in the Trading Book;
    (f) each Exposure arising from an Unsettled Transaction, free delivery or OTC derivative; and
    (g) each Exposure in the form of a fee, commission, interest, dividend or margin on an exchange-traded derivative directly related to the items included in the Trading Book.
    Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]

    • PIB A2.1.3 Guidance

      Whenever an Authorised Firm acts as principal (even in the context of activity normally described as 'broking' or 'customer business'), positions should be assigned to the Trading Book. This applies even if the nature of the business means that the only risks being incurred by the Authorised Firm are Counterparty Risks (that is, no Market Risk Capital Requirements apply).

      Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]