EU Delays Implementation of Basel III Trading Book Overhaul
The EU delays the implementation of Basel III regulations governing trade books.
The European Union (EU) has decided to postpone a substantial portion of the implementation of the final Basel III rules, which concern capital and liquidity requirements for banks. The trading book overhaul, known as the Fundamental Review of the Trading Book (FRTB), will now be effective from January 1, 2027. A related delegated act will be issued imminently, according to an EU Commission spokesperson.
The initial plan was for Basel III's full implementation, including FRTB, to commence on January 1, 2023, with a five-year phase-in period for certain elements. However, the implementation process has been gradual, with many regions making considerable progress. As of September 2024, over two-thirds of Basel Committee member jurisdictions have already published final rules for all final elements of Basel III, and these standards are active in more than a third of these member jurisdictions.
While the broader Basel III reforms continue to be implemented on a consistent basis across jurisdictions, specific implementation dates for the FRTB have not been outlined in recent updates. Switzerland, for instance, is scheduled to implement the final Basel III standard from January 1, 2025, following an amendment to the Capital Adequacy Ordinance.
The ongoing implementation of all Basel III elements, including FRTB, is a work in progress, with continuous advancements observed in various jurisdictions. The EU's decision to delay the FRTB's implementation is part of this evolving process aimed at ensuring a harmonious and comprehensive overhaul of banking regulations.
The European Union's decision to postpone the implementation of the Fundamental Review of the Trading Book (FRTB) from January 1, 2023, is a part of the ongoing progress in the global implementation of Basel III reforms, affecting the finance industry and business activities. With many regions already implementing Basel III standards, the delay aims to ensure a harmonious and comprehensive overhaul of banking regulations worldwide.
