The Basel Committee introduced the Fundamental Review of the Trading Book (FRTB) regime to address the shortcomings in the previous regulatory regime and weaknesses in risk measurement under two models for calculating capital requirements - the standardised approach (SA) and internal model-based approach (IMA). The FRTB regulation was finalised in January 2019 by the Basel Committee, followed by regional implementation across the world. The FRTB is not yet implemented in the UK, EU or US.
AFME’s work aims at ensuring a consistent application of the FRTB across the main western jurisdictions. We advocate for a synchronised timeline for implementation but also for comparable and competitive rules that ensure a level playing field for banks.
The UK has delayed the whole Basel package implementation to January 2027 and has further delayed the implementation of new rules on FRTB-IMA to January 2028.
The EU has postponed the application of FRTB to January 2027 and has recently consulted on the implementation of the new market risk prudential requirements in the EU in the context of ongoing uncertainty on the implementation of FRTB in other jurisdictions.