http://www.aleablog.com/trading-book/ Alea Jacta Est Wed, 03 Mar 2010 18:43:34 +0000 http://wordpress.org/?v=2.9.2 hourly 1 http://www.aleablog.com/trading-book/#comment-3508 jck Mon, 19 Oct 2009 16:48:05 +0000 http://www.aleablog.com/?p=4318#comment-3508 or they could just shrink the trading book, there are many ways to beef up the capital ratio. raising cash is one of them and shrinking the book or the balance sheet another. but you are right, particularly with new rules regarding liquidity as in the U.K. the result would be a sharp increase in govt paper bought by the banks (conveniently...). or they could just shrink the trading book, there are many ways to beef up the capital ratio. raising cash is one of them and shrinking the book or the balance sheet another. but you are right, particularly with new rules regarding liquidity as in the U.K. the result would be a sharp increase in govt paper bought by the banks (conveniently…).

]]> http://www.aleablog.com/trading-book/#comment-3507 BigBadBank Mon, 19 Oct 2009 15:52:13 +0000 http://www.aleablog.com/?p=4318#comment-3507 Thanks jck. So same proportion of tier1/2/3 made up of the same things as the banking book. Doesn't that mean that the banks will have to buy a lot government bonds in the next couple of years to beef up their tier1? Thanks jck. So same proportion of tier1/2/3 made up of the same things as the banking book. Doesn’t that mean that the banks will have to buy a lot government bonds in the next couple of years to beef up their tier1?

]]> http://www.aleablog.com/trading-book/#comment-3506 jck Mon, 19 Oct 2009 12:23:18 +0000 http://www.aleablog.com/?p=4318#comment-3506 banks have 2 books, trading and banking currently with the same capital requirements and in the future the trading book will require more capital the bank will need to raise more equity or curtail the trading book. banks have 2 books, trading and banking currently with the same capital requirements and in the future the trading book will require more capital the bank will need to raise more equity or curtail the trading book.

]]> http://www.aleablog.com/trading-book/#comment-3505 BigBadBank Mon, 19 Oct 2009 11:30:00 +0000 http://www.aleablog.com/?p=4318#comment-3505 Sorry if this is a stupid question, but what does trading book capital actually consist of? Sorry if this is a stupid question, but what does trading book capital actually consist of?

]]> http://www.aleablog.com/trading-book/#comment-3502 jck Sun, 18 Oct 2009 15:03:53 +0000 http://www.aleablog.com/?p=4318#comment-3502 No, the discount window doesn't take equities as collateral and lehman didn't have access to the window anyway (it was not a bank). The funding of equities was done through the PDCF which initially took "all collateral eligible for tri-party repurchase agreements arranged by the Federal Reserve Open Market Trading Desk (Desk), as well as all investment-grade corporate securities, municipal securities, mortgage-backed securities and asset-backed securities for which a price is available" this definition was amended in september (presumably to help lehman) to "all collateral eligible in tri-party repurchase arrangements with the major clearing banks as of September 12, 2008" and that would include equities. No, the discount window doesn’t take equities as collateral and lehman didn’t have access to the window anyway (it was not a bank). The funding of equities was done through the PDCF which initially took “all collateral eligible for tri-party repurchase agreements arranged by the Federal Reserve Open Market Trading Desk (Desk), as well as all investment-grade corporate securities, municipal securities, mortgage-backed securities and asset-backed securities for which a price is available” this definition was amended in september (presumably to help lehman) to “all collateral eligible in tri-party repurchase arrangements with the major clearing banks as of September 12, 2008″ and that would include equities.

]]> http://www.aleablog.com/trading-book/#comment-3501 Marcus Sun, 18 Oct 2009 12:50:45 +0000 http://www.aleablog.com/?p=4318#comment-3501 Not related, but what about the "Glimpse Into The Fed's Discount Window" at ZH, can a bank gets fundng at the discount window against equities? Not related, but what about the “Glimpse Into The Fed’s Discount Window” at ZH, can a bank gets fundng at the discount window against equities?

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