What Changed
- EBA recommended that competent authorities not prioritize supervisory or enforcement action on FRTB boundary provisions and internal risk transfers.
- EBA published technical considerations for material implementation issues and supervisory benchmarking treatments under the market risk framework.
- European Commission adopted a Delegated Act under CRR Article 461a on 4 June 2026, altering market risk capital requirements from 1 January 2027.
The European Banking Authority (EBA) has published a no-action letter and technical clarifications regarding the implementation of the market risk framework for EU banking institutions. The measures target the Fundamental Review of the Trading Book (FRTB) framework, focusing specifically on the boundary between the banking book and the trading book, internal risk transfers between these books, and associated reporting requirements.
**Affected Institutions and Implementation Context**
The guidance affects EU financial institutions, specifically "multiplier banks" that apply the institution-specific multiplier introduced by the European Commission’s Delegated Act, alongside national competent authorities across the Union. Without the EBA's intervention, multiplier banks would face an operationally complex and costly implementation of multiple versions of the boundary framework. Furthermore, requiring non-multiplier institutions to apply a different boundary framework would raise level-playing-field concerns across the European Union.
**Regulatory Provisions and Legal Basis**
The EBA issued the no-action letter under Article 9c of Regulation (EU) No 1093/2010 (EBA Founding Regulation). This provision empowers the EBA to issue no-action letters when the application of a relevant legislative act risks raising significant issues, such as direct conflicts with another act. In the letter, the EBA recommends that competent supervisory authorities refrain from prioritizing supervisory or enforcement actions regarding the FRTB boundary provisions, internal risk transfers, and related reporting requirements. Additionally, the EBA provided technical considerations on material implementation issues and clarified the treatment of institutions for the supervisory benchmarking exercise.
**Legislative Timeline**
On 4 June 2026, the European Commission adopted a Delegated Act ('3rd FRTB DA') under Article 461a of Regulation (EU) No 575/2013 (CRR). The Delegated Act, which includes targeted adjustments to the FRTB framework and accompanying questions and answers, will modify own funds requirements calculations for market risk for three years starting 1 January 2027. The Delegated Act is currently undergoing scrutiny by the European Parliament and Council. The EBA’s no-action letter and technical considerations will become relevant upon the entry into force of the Delegated Act.
Who May Be Affected
EU credit institutions, multiplier banks applying institution-specific multipliers, and competent supervisory authorities.
Cross-Border Context
Applies EU-wide to financial institutions subject to the EU Capital Requirements Regulation (CRR) and FRTB market risk rules.
What to check next
- Outcome of European Parliament and Council scrutiny of the 3rd FRTB Delegated Act
- Publication of the Delegated Act in the Official Journal of the European Union to confirm entry into force date
This article provides general information and does not constitute legal advice. Consult the official text and obtain advice appropriate to your circumstances where needed.