European Commission targeted consultation on the application of the markets risk prudential framework

The European Commission (EC) has launched a consultation to help determine the best approach for the application of the EU's framework on market risk prudential requirements for banks, with an accompanying press release. Last year, the Commission postponed by one year (until 1 January 2026) the date of fundamental review of the trading book (FRTB) application in the EU, in order to align implementation with other major global jurisdictions. Recent international developments indicate further possible delays in these jurisdictions, raising concerns on the international level playing field and the impact on EU banks. In this context, the EC is consulting on possible action within its mandate under Article 461a of the capital requirements regulation around three potential options: (i) implementing the FRTB as currently laid down in the Banking package, from 1 January 2026; (ii) postponing the date of application by a further year (1 January 2027); or (iii) introducing temporary and targeted amendments to the market risk framework for up to three years. A list of possible temporary amendments is set out in the annex to the consultation. Combinations of the options or other alternatives could also be envisaged provided they are within the EC's mandate. Interested parties are invited to submit their contributions by 22 April. The EC is empowered under Article 461a to adopt a Delegated Regulation by the end of June.

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