On 4 March 2026, there was published a draft of the Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026.
Background
As the timing of the implementation of Basel 3.1 is not yet confirmed in some other major jurisdictions, the Prudential Regulation Authority (PRA) consider that implementing the final UK market risk requirements for internationally active institutions’ trading activities in advance of those jurisdictions would risk creating additional operational burdens and complexity for UK institutions and has therefore decided to delay implementation of the new internal model requirements for market risk to 1 January 2028, and legislative change is required to facilitate this.
Summary
This draft statutory instrument sets out a transitional provision that would allow Credit Institutions and Designated Investment Firms (Institutions) to not apply the Prudential Regulation Authority’s (PRA) market risk rules on updated internal model requirements between 1 January 2027 and 31 December 2027 (Transitional Period).
As a result, the PRA rules would allow institutions to continue to use their existing models during that Transitional Period.