We have an interesting question from one of our members.
"We usually perform OTC FX transactions with clients backed-to-back on the market (with Banks). Now we are going to perform a FX swap (i.e. Spot + forward) JPY/EUR for the Bank account for 1 week at the longest. The purpose is to get EUR place @ CB for LCR compliance purpose (no trading purposes).
Bank's Management think that this should be considered as a trading position and therefore be classified within the Bank's trading book. I'm not an expert of trading book but at first sight I'm not willing to classify this transaction within the TB."
Could you please share your thoughts on this subject? I really appreciate any kind of contribution.
Global Risk Community, Founder