Trading book

Positions held for trading or to hedge other trading positions, valued at market prices. They attract market risk capital.

Where you will meet it

Trading book comes up in 7 learning outcome notes across the FRM syllabus. A few of them:

• Banks
  FRM Part I · Financial markets and products

  “The trading book holds positions taken for market making, short-term profit or hedging other trading positions.”

• Fundamental Review of the Trading Book
  FRM Part II · Market risk measurement and management

  “Before the 2007 to 2009 crisis, trading book capital rested on a 10-day 99 percent VaR.”

• Capital Regulation Before the Global Financial Crisis
  FRM Part II · Operational risk and resilience

  “The 1996 amendment, effective 1998, added market risk capital for the trading book.”

• Fundamental Review of the Trading Book
  FRM Part II · Market risk measurement and management

  “The trading book boundary moves from stated intent to a presumptive list of instruments that belong in the trading book.”

See also

Market risk

All terms beginning with T · FRM glossary

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