Trading book institute

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In the banking sector , trading book institutes are those credit institutions whose trading book exceeds certain de minimis limits.

The term is no longer regulated in the German Banking Act (KWG), but in Art. 94 of the EU-wide capital adequacy regulation (English abbreviation CRR).


In order to standardize the different competitive conditions between credit institutions and investment firms, the sixth amendment to the KWG has divided institutions into trading book institutes and non-trading book institutes. The decisive factor for the allocation to one of the two forms is the balance sheet extent of the transactions that can be allocated to the trading book and the other transactions that are consequently allocated to the banking book : If financial instruments do not belong to the trading book, they are automatically part of the banking book . The status of trading book or non-trading book institution can be changed, but is subject to strict regulatory requirements.

Entry threshold to the trading book

Trading book institutions are credit institutions whose trading book exceeds the following minimum limits:

  1. the share of the institution's trading book generally exceeds 5 percent of the total of on-balance-sheet and off-balance-sheet transactions or
  2. the total of the individual positions in the trading book generally exceeds the equivalent of EUR 15 million or
  3. the share of the trading book exceeds (at least once) 6 percent of the total amount of on-balance sheet and off-balance sheet transactions or
  4. the total of the positions in the trading book exceeds (at least once) the equivalent of 20 million euros.

Conceptual content

At banks, the trading book is the portfolio of financial instruments that are held for short-term trading purposes or held in the company's own portfolio to make a profit ( Section 1a (1) KWG). In particular, the trading book includes financial instruments and goods that are taken over in order to use existing or expected differences between the buying and selling prices or fluctuations in market rates, prices, values ​​or interest rates in the short term so that proprietary trading is achieved. Only financial instruments and goods are admitted to the trading book if they are tradable and are held either with the intention of trading or to hedge other components of the trading book. According to Section 4 (6) SolvV, trading book risk positions are the interest-rate and share price-related risk positions in the trading book of a trading book institution.

Financial instruments

According to Art. 4 Para. 1 No. 50 Capital Adequacy Ordinance (CRR), financial instruments are all contracts that create a financial asset for one of the parties involved and a financial liability or an equity instrument for the other. These include in particular:

  • Securities
  • Units in investment funds
  • Money market instruments and
  • Derivatives.

Tradability, intent to trade and trades

Positions for which there is a market are tradable . "The tradability of the instruments ... is important in order to prevent the inclusion of transactions in the trading book that cannot be turned over on the market and thus - with relatively low credit and backing rates compared to the banking book - can lead to a concentration of risk at the underlying institution ". Receivables can be traded (this is why the fungibility of borrower's note loans is particularly high); a secondary market has been established for other loans.

For trading purposes "For positions that are held for trading purposes, is those held intentionally for short-term resale or for which there is no intention to of current or soon to be 11, Section of the Capital was in Article 2 submitted observations. Expected exchange rate differences between the buying and selling rate or to profit from other exchange rate and interest rate fluctuations. "Exemplary criteria for allocation to the trading book directly at the conclusion of the transaction:

  • Resale in own stock
  • Use of differences between buying and selling prices
  • Short-term achievement of a proprietary trading success
  • Related hedging transactions

According to MaRisk, trading transactions are money market transactions, securities transactions, foreign exchange transactions, transactions in tradable claims, transactions in goods or transactions in derivatives. The trading book also includes repurchase and loan transactions on positions in the trading book, as well as transactions that are comparable to repurchase and loan transactions on positions in the trading book.

Trading and banking book

The trading book and the banking book must be clearly identifiable at all times and must therefore be kept separate from one another. For this reason, the identification or at least the ability to determine the balance sheet and off-balance sheet trading book items at any time must also be guaranteed in accounting.

A reallocation of positions in the trading book to the banking book or from positions in the banking book to the trading book must be carried out if the requirements for attributing the corresponding position to the trading book or the banking book no longer apply. Otherwise, positions in the trading book may only be reassigned to the banking book or vice versa if there is a conclusive reason for the reassignment ( Section 1a (4 ) KWG). This is intended to prevent banks from using arbitrary reallocations to their advantage. A short-term resale is equivalent to the partial or complete closing of the market risk position by means of a hedging transaction (closing out ).

Customer transactions in the trading book

In the case of transactions with third parties that are triggered by the order of a customer (customer transactions), in which the service aspect is in the foreground and which should therefore be added to the banking book, the transactions concerned are to be reallocated to the trading book if they are not traded on at the latest by the close of business have been. The service character of customer transactions is fundamentally called into question under banking supervisory law if speculative purposes are at least pursued; in any case, an allocation to the banking book is out of the question.

To focus on the close of business is problematic. In the time between the conclusion of the customer transaction and the close of business, risks can develop for the institute that assume an objectively speculative character. According to the wording and purpose of the law, BaFin could just as well argue that the position should be continued immediately (i.e. only with technical delays) if the assignment of customer business to the trading book is to be avoided. The existing relief can only be defended with the stipulation that the BaFin, for certain business structures - which formally fall under the relief -, in accordance with the purpose of the statutory regulation, require assignment to the trading book, which is assigned to the trading book. For the positions established within the framework of the issuing business ( Section 1 Paragraph 1 Sentence 2 No. 10 KWG), allocation to the trading book is mandatory if the institution does not want to include the securities in the investment portfolio but rather hold them for short-term resale.

Borrower-related overall position

The borrower-related total position (KnbGp) at trading book institutions is the sum of the credits in the trading book and the credits in the banking book.

Non-trading book institute

The non-trading book institute, on the other hand, may use the above. Do not exceed de minimis limits in the trading book. If the de minimis limit is exceeded, the institute automatically becomes a trading book institute. A return to the status of a non-trading book institute is only possible if the actual trading book institute remains below the above-mentioned minor limits for a longer period of time and the change from trading book institute to non-trading book institute is requested from the Federal Agency and this is complied with. The term longer period must be defined by the banking supervisory authority as part of an administrative act .

Section 1 (12) and Section 2 (11) currently no longer applicable : A non-trading book institute within the meaning of Section 1 (12) in conjunction with Section 2 (11) KWG does not aim to achieve short-term proprietary trading within the meaning of Section 340c (1) HGB . In order to maintain this status, all positions areassigned tothe banking book without exceptionand a trading book is kept without any position. The requirements for backing market price risk positions in the trading book in accordance with sections 294 et seq. SolvV are therefore not relevant.


The accounting regulations are also largely compatible with banking and regulatory requirements. Financial assets (and liabilities) are held for trading in accordance with IAS 39.9 if they

  • are acquired or entered into primarily with the intention of being sold or repurchased soon,
  • Are part of a portfolio of financial instruments that are jointly managed and for which there is substantial evidence that short-term profit-taking is to be made with them,
  • represent derivative financial instruments (exception: designated and effective hedging instruments for hedging).

For accounting purposes, the trading and banking book must be kept separate from one another so that correct allocation to one of the books is guaranteed and verifiably documented at all times.

Web links

Individual evidence

  1. Monthly Report of the ECB February 2004, p. 77 ff .; Bundesbank monthly report December 2006, p. 76.
  2. Text of the EU regulation (PDF)
  3. BaKred Handelsbuch 1999, p. 4.
  4. The term position includes proprietary trading positions, positions resulting from customer service and market making positions; see. CAD III Art. 11 Paragraph 2.
  5. Trading book transactions with a holding period of less than 3 months
  6. AT 2.3 Item 3
  7. a b c BaKred circular 17/99 of December 8, 1999, p. 9.