ISDA, GFMA, Institute of International Finance (IIF) and International Banking Federation (IBFed) have sent a joint response to the Basel Committee’s consultation on the fundamental review of the trading book. They criticise how Credit Valuation Adjustment under Basel 3 introduces further double counting of the same risks. To better align risk with regulatory capital, the associations reject simple solutions and demand recognition of modern modelling capabilities that firms are using to arrive at their internal models. The associations also propose that, in deciding where the boundary between the banking and the trading books lies, the unit of account should be at the portfolio, rather than at the position, level. (Source: Industry Response to Fundamental Review of the Trading Book)