The European Commission announced on Thursday a three-year delay to the introduction of a new market risk capital framework for banks. This strategic postponement aims to observe how the United States and Britain implement the same international standards, ensuring European financial institutions maintain a level playing field. The decision moves the full application of the rules, originally slated for January 2027, to the end of 2029.
This framework forms a crucial component of the Fundamental Review of the Trading Book (FRTB) and the overarching global Basel III banking standards. These initiatives are designed to bolster risk measurement within banks’ trading operations and guarantee that their capital reserves accurately reflect the inherent risks undertaken. By pushing back these capital requirement rules related to trading risk, Europe seeks to prevent its banks from being disadvantaged against their U.S. and British counterparts while clarity emerges on their respective regulatory approaches.
EU Commissioner for Financial Services, Maria Luis Albuquerque, emphasised the importance of the move. “Europe’s banks must be able to compete on equal terms with their international peers,” Albuquerque stated. She added that these “targeted and time-limited measures help preserve a level playing field in global financial markets while maintaining our commitment to the Basel standards.” The Commissioner also noted the delay provides “necessary time to monitor developments in other major jurisdictions before determining the most appropriate long-term approach.”
Under existing EU law, the new capital requirement rules would have come into full effect from January 2027. The Commission’s proposed new regime, which will govern the period from 2027 to the end of 2029, requires no veto from either EU governments or the European Parliament over the next six months. Officials confirmed that this three-year delay has been agreed upon in consultation with both the European Central Bank and the European Banking Authority, underscoring broad institutional alignment.
