Differences in liabilities can, accordingly, sometimes warrant different capital requirements for portfolios of similar assets across firms. At the risk of packing too much into these introductory points, let me also note that an emphasis on a firm’s liabilities is related to, but not synonymous with, an emphasis on its activities.
Proprietary trading and other high risk trading activities should be assigned to a separate legal entity if the activities to be separated amount to a significant share of a bank’s business and are above a certain threshold. This would ensure that trading activities beyond the threshold are carried out on a stand-alone basis and separately from the deposit bank.