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Basel plays down impact of trading rule changes on capital

[LONDON] Overall capital requirements for banks would rise by 4.7 per cent under planned rules to ensure lenders set aside enough capital to cover the risk of trading book assets turning sour, global regulators said on Wednesday.

The Basel Committee, made up of banking supervisors from nearly 30 countries, published its long-awaited impact assessment for new capital rules that form part of its fundamental review of bank trading books.

Banks have complained the rules will lead to a quantum increase in capital, making it harder to keep trading for investors at a time when liquidity in markets is already falling, helping to trigger bouts of extreme volatility. "It shows that the change in market risk capital charges would produce a 4.7 per cent increase in the overall Basel III minimum capital requirement," the committee said in a statement. "When the bank with the largest value of market risk-weighted assets is excluded from the sample, the change in total market risk capital charges leads to a 2.3 per cent increase in overall Basel III minimum regulatory capital."