The Association for Financial Markets in Europe (AFME) welcomes yesterday’s adoption by the European Commission of the Delegated Act to delay the implementation of the EU’s market risk framework by one year to 1 January 2026. AFME supports the EU Commission’s decision given the need for further clarity on both substance and timing, and the need for international alignment.

Caroline Liesegang, Managing Director, Head of Capital & Risk Management, Sustainable Finance and Research at the Association for Financial Markets in Europe (AFME) said: “Delaying the implementation of the market risk framework (FRTB) was a necessary decision in light of the ongoing lack of clarity on both content and timeline in other major jurisdictions. It is important to avoid unnecessary regulatory fragmentation when possible. Today’s decision underlines that the European Commission firmly supports international alignment.

“AFME also commends the European Commission’s complementary Q&A as it takes into consideration and clarifies the implications a delayed implementation would have on other elements of the EU’s banking regulatory framework (e.g. CRR3 reporting and disclosure requirements and the calculation of the Output Floor). These elements are intrinsically linked to the market risk framework and could create significant challenges for banks if not addressed accordingly.

“However, further work remains to be done. It is crucial that the EU’s implementation of the Trading Book/Banking Book boundary (TB/BB boundary) is consistent with the timeline invoked by the delegated act to delay both the FRTB Standardised Approach (SA) and the FRTB Internal Model Approach (IMA) capital calculations and therefore, we welcome the guidance issued to the European Banking Authority (EBA) to instruct supervisors to delay the implementation of the TB/BB boundary as they have done previously. We are, however, disappointed in the Commission’s conclusion not to address the credit valuations adjustment framework (CVA) and the profit and loss attribution test (PLAT). In our view, given the interdependence of the various regulatory frameworks, an aligned timeframe of implementation and transition is important to avoid operational inconsistencies. We look forward to a continuing dialogue with the Commission and the EBA as these issues evolve and as the broader international picture becomes clearer.”

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