Mairead McGuinness says one-year deferral of market risk rules will preserve “level playing field”
The EU will defer the application of key provisions of post-crisis banking reforms by one year, arguing that expected US delays to Basel implementation would disadvantage lenders in Europe.
The move, championed by France, raises further doubts over the enforcement of the so-called Basel III package, an ambitious overhaul of bank regulation agreed in the wake of the 2008 financial crisis that the EU was planning to complete by 2025.
Following signs that US regulators would allow their timeline to slip for the so-called “Basel Endgame”, the European Commission decided to defer the “fundamental review of the trading book” (FRTB) to January 2026. “Essentially it’s down to a level playing field. We have decided, given all of the evidence and delays elsewhere, to postpone the market risk rules,” Mairead McGuinness, the EU commissioner for financial services, told the Financial Times.
The specific reforms, which were unveiled in 2016 as a measure to stop gaming of the regime, would require investment banks to hold more capital against their wholesale trading books, with the aim of limiting market risk as they buy and sell securities from clients. Confirming that the EU would delay the specific reforms by one year, McGuinness added: “I would hope that the US and other jurisdictions will adopt the standards faithfully and quickly.” Large Eurozone lenders have long sought a delay to the rules, arguing that implementing stricter capital requirements would put them at a disadvantage compared with American and British banks....
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