Overview
- The European Commission adopted a proposal on June 4 to delay or neutralize the capital impact of the Fundamental Review of the Trading Book, changing when new market-risk capital charges will bite for EU banks.
- Under the Commission’s plan, a targeted regime agreed with the ECB and EBA would run from 2027 through 2029 unless blocked in a review by member states or the European Parliament, while some reports say capital effects could be shielded until 2030.
- Officials say the move was coordinated with the European Central Bank and the European Banking Authority and now faces up to six months of scrutiny during which national governments or Parliament can veto the measure.
- The pause removes an immediate regulatory headwind for bank profits and investor sentiment because full FRTB capital rules had been expected to raise banks’ capital needs substantially and cut returns.
- The change builds on repeated delays to the FRTB inside a wider Basel III package that the EU largely implemented in 2024, and it follows lobbying from industry groups and similar policy shifts in the US and UK that policymakers say risk creating a competitive gap.