ERM Glossary: Trading book

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The trading book of a bank is defined in e.g. the EU’s Capital Requirements Directive and Capital Requirements Regulation as all positions in financial instruments and commodities held by an institution either with trading intent, or in order to hedge positions held with trading intent. ‘Positions held with trading intent’ means any of the following:

(a)    Proprietary positions and positions arising from client servicing and market making;

(b)   Positions intended to be resold short term;

(c)    Positions intended to benefit from actual or expected short term price differences between buying and selling prices or from other price or interest rate variations.

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