On 15 July 2025, the Prudential Regulation Authority (PRA) published Consultation Paper 17/25 – Basel 3.1: Adjustments to the market risk framework (CP17/25).
Background
The Basel 3.1 standards introduce a comprehensive set of amendments to the market risk framework, known as the Fundamental Review of the Trading Book (FRTB).
On 30 November 2022, the PRA consulted on its proposals to implement the Basel 3.1 package in the UK. The PRA published its response to the consultation in two parts: Part 1, published on 12 December 2023 as Policy Statement (PS)17/23 and Part 2, published on 12 September 2024 as PS9/24. The near-final rules published as part of PS9/24 covered the entire Basel 3.1 package, including restating those elements published in PS17/23.
On 17 January 2025, the PRA, in consultation with HM Treasury, announced a delay to the implementation of the Basel 3.1 package in the UK by one year until 1 January 2027. The delay was to allow time for clarity to emerge about plans for implementation in the United States and taking into account competitiveness and growth considerations. At the time the PRA noted it would continue to monitor developments. On 12 June 2025, the European Commission announced a planned one-year delay – until 1 January 2027 – to the EU implementation of the FRTB, citing the ongoing uncertainty around the timing of implementation in other major jurisdictions.
Proposals
In CP17/25 the PRA proposes to delay the implementation of the new FRTB internal model approach (FRTB-IMA) for another year, until 1 January 2028.
The internal model approach is predominately used by major trading firms, including international groups engaged in cross-border trading activity. It is therefore the most relevant part of the FRTB for cross-border coordination given the costs and complexity of running different models across jurisdictions.
The PRA feels that a delay to 1 January 2028 would allow additional time for coordination. All other elements of the FRTB, including the trading book boundary, the Advanced Standardised Approach (ASA), and the Simplified Standardised Approach, would be implemented on 1 January 2027 alongside the other parts of Basel 3.1.
The PRA also proposes a small number of operational adjustments to the trading book boundary and the ASA to ensure efficient outcomes and to simplify their implementation and operation, which would take effect from 1 January 2027.
Next steps
The deadline for comments on CP17/25 is 5 September 2025.