A category of risks that comprises traded market risk, foreign exchange risk and commodity risk. For example, traded market risk represents a measure of market risk capturing the risk arising from changes in fair value of positions, investments, assets, liabilities or commitments comprising portfolios. Changes in fair value result from fluctuations in market prices. Traded market risk reflects the potential financial loss arising from fluctuations in the fair value of a bank’s trading book, which is made up of financial instruments held for short-term trading (HFT). Fair value fluctuations are usually caused by market factors, such as interest rates, foreign exchange rates, equity prices, and commodity prices.

TFC risks may also refer to a set of risks, arising from, or related to asset specificity and asset redeployability, that is, the ability to find the specific class of assets for investment, and the extent to which assets have alternative uses or ways of deployment. These risks are known as termination for convenience (TFC), a clause that allows a party to a contract or agreement to terminate a contract at its own convenience without requiring any justification for termination.