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 is assessing its implementation in light of international developments. The European Commission has consulted on temporary targeted adjustments to the framework, including an overall multiplier to mitigate capital impacts until 31 December 2029. Further developments are expected as part of the Commission’s broader review of banking sector competitiveness.