On Thursday 12 June, the European Commission once again proposed to postpone by one year - to January 2027 - the entry into force of provisions concerning the market activities of investment banks (Fundamental Review of the Trading Book or FRTB) included in the ‘Basel III’ package strengthening banking prudential requirements (see EUROPE 13420/31, 13460/9).
In its legislative proposal, the EU institution justifies this approach by the need not to put the European banking sector at a disadvantage compared with other jurisdictions, with which maintaining a level playing field is considered “very relevant” and which are late in adopting the FRTB rules. In particular, it notes that the United Kingdom and the United States will not apply the provisions until early 2027 “at the earliest”. On the other hand, Canada, Hong Kong, Japan, Singapore and Switzerland have implemented the standards concerned.
The FRTB rules incorporate more sophisticated risk measurement techniques aimed at aligning capital requirements more closely with the actual risks that banks face in their capital market activities.
The European Parliament and the Council of the EU have three months to react to the proposal for a delegated act submitted to them.
To see the legislative proposal: https://aeur.eu/f/hai
NSFR. Also on Thursday, the EU Council announced the adoption of the proposal for a regulation to make permanent the current liquidity requirements (‘net stable funding ratio’ or NSFR) for certain short-term securities financing and unsecured transactions (see EUROPE 13611/13).
Neither the European Parliament nor the Member States amended the European Commission’s initial proposal. This matter is being dealt with urgently so that the legislative revision can be in place before the existing prudential banking rules expire on Saturday 28 June. (Original version in French by Mathieu Bion)