The European Banking Authority (EBA) has issued a no-action letter recommending that national supervisors refrain from prioritising enforcement of the boundary between the banking book and the trading book under the Fundamental Review of the Trading Book (FRTB) framework, alongside technical clarifications to support implementation of the revised market risk rules. The measures, published on 3 August 2026, aim to ease the transition for EU banks as the European Commission's Delegated Act modifying own funds requirements for market risk moves toward entry into force, currently under scrutiny by the European Parliament and Council.
The EBA's no-action letter, issued under Article 9c of its Founding Regulation, targets the FRTB provisions governing the banking book–trading book boundary, internal risk transfers between these books, and related reporting requirements. The EBA argues that without these clarifications, institutions applying the institution-specific multiplier introduced by the Delegated Act—so-called 'multiplier banks'—would face an operationally complex and costly implementation of multiple versions of the boundary framework. Requiring all other institutions to apply a different boundary framework would create level-playing-field concerns within the Union, the EBA said. The letter also clarifies the treatment of institutions for the supervisory benchmarking exercise.
The move follows the European Commission's adoption on 4 June 2026 of the Delegated Act under Article 461a of the Capital Requirements Regulation (CRR), which will modify the calculation of own funds requirements for market risk from 1 January 2027 for a period of three years. The Delegated Act introduced targeted adjustments to the FRTB framework and was accompanied by questions and answers on aspects of its application, including the trading and non-trading book boundary. The EBA's no-action letter and technical considerations are intended to facilitate a smooth, consistent and proportionate implementation of the revised framework across the EU, and will become relevant once the Delegated Act enters into force.
The EBA's recommendations carry significant implications for EU banks, particularly those designated as 'multiplier banks' that would otherwise have to juggle multiple boundary frameworks. By urging supervisors to deprioritise enforcement, the EBA reduces immediate compliance pressure, potentially lowering operational costs and administrative burden for these institutions. However, the no-action letter also introduces a degree of regulatory uncertainty, as banks may face delayed clarity on boundary rules, which could complicate risk management and capital planning. National competent authorities, as the primary supervisors, will need to weigh the EBA's guidance against their own supervisory priorities, potentially leading to divergent practices across member states despite the EBA's aim of harmonisation. The European Parliament and Council, currently scrutinising the Delegated Act, will ultimately determine the timeline for the framework's application, with the EBA's clarifications serving as a bridge until the rules are finalised.