Following the adoption today by the European Commission of the Delegated Act to delay the implementation of the EU’s market risk framework by another year to 1 January 2027, Caroline Liesegang, Managing Director, Head of Capital & Risk Management at the Association for Financial Markets in Europe (AFME), commented:

“AFME supports the Commission’s decision to delay the implementation of the market risk (FRTB) framework, given the need for further clarity on both substance and timing, as well as the need for alignment between jurisdictions, which is especially important for internationally-active banks. This is key to avoid unnecessary regulatory fragmentation. We also welcome the Commission’s clarification that last year’s communication package and related SSM/EBA guidance is not expected to change. Given the operational complexities and costs that some banks face for the maintenance of the current internal models, we welcome the flexibility provided for supervisory authorities in their assessment of current internal models.

“However, further work remains to be done. Long-standing concerns remain within the market risk framework and will need addressing through targeted amendments to the framework. The Commission initiated its thinking on these changes in its recent consultation and we would strongly encourage work to continue progressing on this workstream in collaboration with the industry. We look forward to continuing dialogue with the Commission, the EBA and SSM as these issues evolve and as the broader international picture becomes clearer.”

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