June 12, 2025:
The European Commission has today adopted a delegated act that postpones by one additional year – until 1 January 2027 – the date of application of the one remaining part of the Basel III international standards in the EU – the Fundamental Review of the Trading Book (FRTB). The FRTB aims to introduce more sophisticated risk measurement techniques, allowing for a closer alignment between capital charges and the actual risks banks are facing in their capital markets activities.
The Council today adopted targeted changes to EU liquidity rules for the banking sector. The amendments aim to maintain liquidity in financial markets and ensure a more level playing field for EU banks vis-à-vis their international peers.
Today’s decision renders permanent the current transitional ratio levels of certain short-term securities financing transactions (SFTs) held by banks. Those ratio levels are used to help calculate a key prudential and stability requirement known as the net stable funding ratio or NSFR.
Without intervention, the ratios – which under the now permanent regime are lower than those set out under international Basel standards for banks – would have immediately increased on 28 June this year. Using a lower ratio level for SFTs in the NSFR calculation formula should encourage more liquidity for EU banks without affecting their stability.