UK Central Bank (Bank of England) to Implement Basel 3.1 in 2027 & Internal Model Approach for Market Risk of Basel 3.1 to Start from 2028
16th July | Hong Kong
UK central bank (Bank of England) will implement Basel 3.1 in 2027, with Internal Model Approach for Market Risk Basel 3.1 to start from 2028. Bank of England (15/7/25): “The Bank of England (‘the Bank’) has announced a package of measures designed to maintain stability in the financial sector while offering new growth opportunities for mid-sized banks and building societies. The Prudential Regulation Authority (the PRA) has today published a consultation on changes to its Basel 3.1 market risk rules – specifically the “Fundamental Review of the Trading Book” (FRTB). The proposals will allow the PRA to deliver its commitment to implement the vast majority of Basel 3.1 (covering approximately 90% of risk-weighted assets in the UK) on 1 January 2027, while allowing time for greater clarity to emerge in other jurisdictions on their own implementation of the aspects most relevant for cross-border activities. 1 January 2027 will also be the proposed implementation date for the Strong and Simple capital regime. Taken together the changes mean UK firms of all sizes can benefit from greater risk-sensitivity and proportionality from that point. Specifically, the proposed changes would: 1) Set the date for the introduction of the new internal model approach for market risk as 1 January 2028: firms with internal model permission today can continue to use their existing internal models until 31 December 2027; 2) Allow all other aspects of Basel 3.1 to proceed on 1 January 2027; 3) Allow Strong and Simple to proceed on 1 January 2027, allowing smaller firms to benefit from a more proportional regime that gives them greater room to grow. … … In addition to these timing points, the proposal also makes minor changes to the FRTB to smooth its implementation. These include adding flexibility for investments in funds and introducing a permissions regime for capitalising complex risks, both under the standardised approach, in order to reduce operational burdens on firms and ensure capital requirements are appropriate. The PRA has also announced prospective plans to make it easier for mid-sized banks to compete in the mortgage market. The regulator will publish a Discussion Paper in mid-summer with options to help mid-sized banks to grow by adjusting some barriers to gaining permissions to build Internal Ratings Based Models for residential mortgages.
“ UK Central Bank (Bank of England) to Implement Basel 3.1 in 2027 & Internal Model Approach for Market Risk of Basel 3.1 to Start from 2028 “
UK Central Bank (Bank of England) to Implement Basel 3.1 in 2027 & Internal Model Approach for Market Risk of Basel 3.1 to Start from 2028
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