FRTB: meeting regulatory objectives not a priority for banks

Author: John Crabb | Published: 11 Apr 2018

The Fundamental Review of the Trading Book (FRTB) is not a priority for banks globally. These have been allocating resources towards regulations with more pressing compliance deadlines such as General Data Protection Regulation (GDPR) and the new Markets in Financial Instruments Directive II (Mifid II).

Full FRTB adoption was initially projected for late 2019, but certain parts have been delayed, including a revision to the implementation date of the minimum capital requirements for market risk which has been postponed by two years. It is this lack of clarity from the Basel Committee on Banking Supervision’s (BCBS) vis-à-vis a final standard for the rule that has led many banks and regulators to de-prioritise compliance measures.

BCBS introduced FRTB in January 2016 following five years of consultation. When implemented, it will make a number of enhancements to capital standards with the aim of preventing trading book exposure. Large parts of the banking industry oppose...