Key features of a trading and banking book.
| Banking book | Trading Book |
| Lending and borrowing | All market transaction |
| Buying and holding the asset, earn interest | A trading asset to earn money |
| Not subject to market risk | Market risk |
| Book values of the asset. | Market to market, ma |
| Profit is derived from interest (interest rate risk) | Profits depend on the mark-to-market value of assets |
| Local transactions | International transactions, high FX risk exposure |
| Assets | Liabilities | |
| BANKING BOOK | Cash
Loans Premises and equipment Other illiquid assets |
Deposits
Other illiquid borrowed funds Capital |
| TRADING BOOK | Bonds(long)
Commodities (long maturity) |
Bonds(short)
Commodities (short) |