On 3 August 2026, the European Banking Authority (EBA) issued an opinion on the application of the provisions relating to the boundary between trading book and banking book, and on the internal risk transfer between books. The EBA also issued a document setting out its considerations on the application of the Fundamental Review of the Trading Book (FRTB) from 1 January 2027.

Background

On 4 June 2026, the European Commission (Commission) adopted a Delegated Act in accordance with Article 461a of the Capital Requirements Regulation (CRR), that, upon entry into force, would modify the calculation of own funds requirements for market risk from 1 January 2027, mostly in the context of the approaches of the FRTB standards. The Commission Delegated Act was accompanied by a communication setting the Commission’s expectation regarding ancillary requirements relating to the provisions included in the Delegated Act.

The Delegated Act is currently under scrutiny by the European Parliament and the Council. If and once the Delegated Act becomes applicable, institutions can apply certain operational relief measures and targeted multipliers in their calculation of own funds requirements for market risk. Institutions faced with an increase in the own funds requirements when migrating from the currently applicable framework to the FRTB framework are eligible to scale down their own funds requirements by means of an overall multiplier.

Opinion

The Opinion issued by the EBA is a ‘No action letter’ that will complement the Delegated Act once it applies. It does this by advising Member State competent authorities not to prioritise any supervisory or enforcement action in relation to the application of the provisions on the boundary between the non-trading and the trading book, until the earlier of 31 December 2029 and the date of application of an amendment to the CRR that clarifies the application of the boundary rules.

Considerations

The other document issued by the EBA discusses issues that have been identified so far, for which clarifications on the regulatory approach are considered necessary. Such issues include:

  • Eligibility to use the overall multiplier and notifications of the competent authority.
  • Application of the overall multiplier of Article 495v CRR in conjunction with the output floor.
  • Structural foreign exchange positions.
  • Disclosures by institutions applying the overall multiplier.
  • Institutions applying the overall multiplier of Article 495V CRR.
  • Implication of the FRTB postponement to the Benchmarking exercise (market risk).