Clearly there is a difference between the gerund form of the verb "read" and the noun "reading." Is the word-formation process of the latter different in that its -ing suffix is derivational?
There is no derivation or inflection. It is a conversion or also called zero derivation. A verb becomes a noun without affixation. Sometimes, the nominalisation is based on the bare form (e.g change), the past form (e.g chosen) or the imperfective form (e.g reading). So, there are many ways to transform a verb into a noun, depending on whether the referent is an action or not, (in/)animate, and so on.