The EACB welcomes the opportunity to provide comments on the European Commission’s consultation regarding the application of the Market Risk Prudential Framework. We consider this a timely and necessary initiative to assess the appropriateness of the implementation timeline and the calibration of the FRTB and weigh alternative options, in light of international developments and uncertainty.
The EACB broadly supports the adoption of a delegated act that takes into account the fragmented international picture on the status of FRTB adoption. Most members support postponing for a further year (i.e. to 1 January 2027) the start date for the application of the new FRTB framework, including market risk own funds requirements as well as related reporting. At the same time, a few members flagged the importance of allowing banks to choose to move completely under the FRTB framework on 1 January 2026 (possibly with the targeted relief measures proposed by the EC) to avoid continued operational complexities of running in parallel FRTB (FRTB- SA for reporting purposes) and the current Basel 2.5 framework.
The postponement scenario would allow to clarify certain issues on which the level 3 text (“ECB Guide on options and discretions”) did not provide an answer yet, such as the time taken by competent authorities to proceed exemption requests, the reliefs measures and the deadlines provided by the authorities to comply in case of exemption refusal. This is relevant for institutions without trading book under CRR2 and which remain exposed to the risk of having to build up a trading book under CRR3. They should have sufficient time and visibility on the exemption process because this determines the importance of the investment in new systems and the FRTB approach to be used.