A. The risk measurement framework

683(i). Market risk is defined as the risk of losses in on and off-balance-sheet positions arising from movements in market prices. The risks subject to this requirement are:

• The risks pertaining to interest rate related instruments and equities in the trading book;

• Foreign exchange risk and commodities risk throughout the bank.

1. Scope and coverage of the capital charges

683(ii). The capital charges for interest rate related instruments and equities will apply to the current trading book items prudently valued by banks, alongside paragraphs 690 to 701 below. The definition of trading book is set out in paragraphs 685 to 689(iii) below.

683(iii). The capital charges for foreign exchange risk and for commodities risk will apply to banks' total currency and commodity positions, subject to some discretion to exclude structural foreign exchange positions. It is understood that some of these positions will be reported and hence evaluated at market value, but some may be reported and evaluated at book value.