On Monday 24 March, the European Commission launched a public consultation to determine the best approach for applying the capital requirements for risks taken in connection with the market activities of investment banks (Fundamental review of the trading book, or FRTB), which are part of the Basel III package strengthening banking prudential requirements.
The EU institution has already postponed the entry into force of these rules by one year, to January 2026 (see EUROPE 13420/31). However, recent developments in the international context point to further delays in the application of the FRTB provisions by major jurisdictions such as the United States and the United Kingdom. Anxious to ensure that European banks are not put at a disadvantage compared with their international competitors, the Commission is now sounding out stakeholders on the approach to be adopted beyond this deadline.
The public consultation, open until Tuesday 22 April, identifies three options: - do nothing and let the regulatory framework apply from 2026; - postpone application of the rules for a further year, without ruling out a change to the regulatory framework by 2027; - make temporary and targeted changes to the market risk framework for a maximum period of three years.
In its consultation document, the Commission suggests some ten amendments to the existing rules. In particular, it is suggested that the PLAT test be used until 2029 to determine capital requirements to cover the market activities of certain banks.
See the consultation document: https://aeur.eu/f/g38 (Original version in French by Mathieu Bion)