FSA turns spotlight on trading valuations

The FSA is set to turn the regulatory spotlight on the valuation of traded positions and is calling for a specific assessment of valuation uncertainty.

In its discussion paper, published today, it outlines its plans for a fundamental review of trading activity regulation, one of the key recommendations of the Turner Review following huge trading losses during the recession. The FSA says it wants to address areas of structural weakness that exacerbated the build up of risk before the financial crisis. In addition to re-assessing valuations of trades, the paper recommends changing the capital framework of the UK financial system to reduce the opportunities for structural arbitrage, especially within the banking sector. In capital st...