08-17-2010, 07:54 PM
Dear,
Held for trading investments are the investments which are purchased with an intension to receive short term gains due to price fluctuation in daily market. In case of a bank specifically SBP stipulates that HFT investments should be sold within 90 days of its purchase as it was our intention to trade. While AFS investments are purchases with an intension to build a long term asset for the bank obviously more than 90 days, in case of HFT gain loss charged to P& L while in case of AFS routed through reserves.
Permanent diminuation was a term used by SECP and SBP in days of crises of stock exchanges in 2008 , beacuse market was not showing its actual worth in those days so banks and other FI were advise to judge the nature of the decline is permanent of temporary, and in case they feel there is permanent diminution they were allowed to charge such provision to p&l is 4 quarters of the year 2009.
Held for trading investments are the investments which are purchased with an intension to receive short term gains due to price fluctuation in daily market. In case of a bank specifically SBP stipulates that HFT investments should be sold within 90 days of its purchase as it was our intention to trade. While AFS investments are purchases with an intension to build a long term asset for the bank obviously more than 90 days, in case of HFT gain loss charged to P& L while in case of AFS routed through reserves.
Permanent diminuation was a term used by SECP and SBP in days of crises of stock exchanges in 2008 , beacuse market was not showing its actual worth in those days so banks and other FI were advise to judge the nature of the decline is permanent of temporary, and in case they feel there is permanent diminution they were allowed to charge such provision to p&l is 4 quarters of the year 2009.
