Allocation of financial and hedging instruments
CA-1.3.10
The allocation of a financial instrument between the trading book and the banking book, or the allocation of
hedging instruments described in Paragraph CA-1.3.7 above, or the transfer of general market risk as explained in Paragraph CA-1.3.9 above, should be subject to appropriate and adequate documentation to ensure that it can be established through audit verification that the item is treated correctly for the purposes of capital requirements, in compliance with the bank's established criteria for allocating items to the trading or banking book, and subject to the policy statement agreed with the Central Bank.October 07CA-1.3.11
The Central Bank intends to carefully monitor the way in which banks allocate financial instruments and will seek, in particular, to ensure that no abusive switching designed to minimise capital charges occurs and to prevent 'gains trading' in respect of
securities which are not marked to market.October 07
