Trading book positions must be tradable or hedgeable, with trading intent evidenced by documented strategies, policies and procedures. Institutions must have clearly defined policies for overall trading book management (what counts as trading, marking to market or model, hedging, external validation of valuations, legal or operational impediments to liquidation, active risk management, reclassification) and for which positions go in the trading book, including the instruments that must be, and those that may not be, assigned to the trading book. Compliance must be fully documented, internally audited at least yearly with results available to the authority, and checked continuously by an independent risk control function. Reclassification between books is allowed only in exceptional circumstances under annually reviewed policies and with permission, positions are assigned to trading desks with documented business strategies and limits, and internal hedges follow Article 106.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.