EC adopts Delegated Regulation on market risk prudential requirements for EU banks

The European Commission (EC) has adopted a Delegated Regulation proposing targeted amendments to the EU prudential framework for banks' market risk, specifically the Fundamental Review of the Trading Book (FRTB) under the Capital Requirements Regulation (CRR). While most Basel III reforms have applied since 1 January 2025, the FRTB has been deferred on several occasions, most recently to 1 January 2027 in response to uncertainty around implementation timelines and potential deviations from the Basel standards in other major jurisdictions. The Delegated Regulation sets out amendments to support a level playing field for EU banks competing internationally in trading activities by offsetting the negative capital impact of the FRTB for a period of three years. It reflects feedback from the November 2025 consultation and the most recent April consultation, as well as input from member state experts. The Delegated Regulation will now be reviewed by the European Parliament and the Council of the EU, with a three-month scrutiny period (extendable by a further three months). If no objection is raised, the measures will enter into application on 1 January 2027, for a period of three years. The EC has published Q&As alongside the adopted Delegated Regulation.

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