EU delays bank trading risk rules for three years, awaits US, Britain

The European Union has put off its final major trading-risk overhaul for banks, giving lenders three more years of breathing room while it waits to see how the United States and Britain move. The European Commission said the change to the Fundamental Review of the Trading Book will take the form of targeted, time-limited amendments beginning January 1, 2027.

The decision matters because the FRTB is the last big piece of the EU’s Basel III package still not fully in force. It is meant to make banks measure trading risks more accurately and hold capital that better matches the danger on their books, but it is also one of the most politically sensitive parts of post-crisis reform because it reaches directly into trading desks and market-making activity.

Brussels said the pause is designed to preserve an international level playing field for EU banks at a moment when some other major jurisdictions are expected to delay implementation beyond January 1, 2027. Maria Luis Albuquerque, the EU commissioner for financial services and the savings and investments union, framed the move as a way to keep European banks competing on equal terms with global peers while still honoring Basel commitments.

The Commission said the action followed a public consultation and technical assessment. It also pointed to the powers granted by the Council and European Parliament, which allowed the Commission to adopt delegated acts if third-country implementation diverged significantly, including postponement of the FRTB by up to two years or targeted amendments for up to three years.

The delay extends a pattern that has already stretched for years. The Basel Committee finalized the FRTB in January 2019. Member jurisdictions first aimed to implement it by January 1, 2022, then pushed that back to January 1, 2023 during the pandemic. In the EU, most other Basel III requirements took effect on January 1, 2025, but the trading-book rule was left out of that first wave. Brussels then postponed FRTB from January 1, 2025 to January 1, 2026 in July 2024, and again to January 1, 2027 in June 2025.

Banks have argued for years that the rule is complex, costly and liable to distort competition if implementation is uneven across regions. Industry groups including AFME and the European Savings and Retail Banking Group have backed alignment, while Finance Watch has said the level-playing-field argument is politically driven rather than empirical. The Bank of England’s Prudential Regulation Authority also flagged the EU’s earlier delay in its own Basel 3.1 market-risk work, underscoring how closely regulators in Brussels, Washington and London are still moving in step, even when they are not moving at the same speed.