The European Commission has launched a consultation on the best approach for applying the European Union’s market risk prudential requirements for banks under the fundamental review of the trading book (FRTB). The exercise is framed around how to maintain an international level playing field if other major jurisdictions delay their implementation, and how to avoid disadvantaging internationally active EU banks. FRTB, introduced under Basel III, is intended to use more sophisticated risk measurement techniques to better align capital charges with the risks banks face in capital markets activities. The Commission previously postponed EU application of FRTB by one year to 1 January 2026 to align with other major jurisdictions, while implementing the rest of the Basel III standards from 1 January 2025. The consultation sets out three potential approaches within the Commission’s mandate: apply FRTB as currently laid down in the Banking package from 1 January 2026, postpone application to 1 January 2027, or introduce temporary and targeted amendments to the market risk framework for up to three years, including possible combinations or other alternatives. Contributions to the consultation are due by 22 April 2025.
European Commission 2025-03-24
European Commission launches consultation on whether to apply the EU FRTB market risk rules in 2026, delay to 2027 or introduce temporary amendments
The European Commission has initiated a consultation on applying the EU's market risk prudential requirements for banks under the Fundamental Review of the Trading Book (FRTB). The consultation explores three approaches: implementing FRTB from 1 January 2026, postponing to 2027, or introducing temporary amendments to the market risk framework. This aims to maintain an international level playing field and avoid disadvantaging EU banks if other jurisdictions delay implementation.