EBA Clarifies the FRTB Market Risk Transition for 2027–2029

The European Banking Authority has published a no-action letter and a separate document setting out technical considerations to support EU banks during the 2027–2029 transition to the revised market risk framework under the Fundamental Review of the Trading Book (FRTB).

From 1 January 2027, EU banks are expected to apply the revised FRTB framework for calculating market risk own funds requirements. The European Commission’s Delegated Act introduces targeted adjustments and operational relief measures for a three-year transitional period covering 2027–2029.

The EBA’s publications address two main areas:

🔹 Trading book and banking book boundary

The EBA advises competent authorities not to prioritise supervisory or enforcement action concerning the new boundary rules, internal risk transfers between the books and related reporting requirements.

This no-action position will apply until the earlier of:

• 31 December 2029; or
• The application date of a CRR amendment clarifying the relevant boundary rules.

The no-action letter does not remove or legally postpone these requirements. It provides temporary supervisory relief while the CRR provisions are being clarified.

🔹 Technical implementation of FRTB

The EBA’s accompanying technical considerations address:

• Eligibility to apply the overall multiplier and related notification requirements;
• Interaction between the Article 495v CRR multiplier and the output floor;
• Treatment of structural foreign exchange positions;
• Disclosure requirements for institutions applying the multiplier; and
• Implications for the market risk supervisory benchmarking exercise.

The temporary transitional arrangements are expected to remain in place until the end of 2029, unless the relevant CRR provisions are amended earlier.

The measures are intended to support a smoother, more consistent and proportionate implementation of the revised market risk framework across the EU.