Milan: Risk managers on Italian trading desks have now rebuilt their capital models twice for a deadline that moved twice. The Fundamental Review of the Trading Book, the Basel standard that recalculates how much capital a bank holds against its market activities, was supposed to bite in 2025, then 2026, and now starts on 1 January 2027. The Commission adopted the adjustments that carry the delay in June.
The reasoning is competitive rather than prudential. The rules replace crude value at risk measures with expected shortfall calculations and force banks to hold capital against risks their internal models previously netted away. Applied in Europe alone, they raise the cost of market making for European banks while American and British competitors trade under lighter requirements. Brussels judged that asymmetry more dangerous than the delay.
That judgement rests on other jurisdictions eventually catching up. The United States has shown no sign of finalising its version, British authorities have pushed their own timetable, and the global consensus that produced the standard has thinned considerably. Each postponement makes the next one easier to justify, which is precisely what supervisors worried about when they agreed to the first.
The delegated act now sits with Parliament and the Council for a three month scrutiny period that can extend by three more. If neither institution objects, the measures apply from January 2027 and run for three years. Members of the economic affairs committee have raised the obvious question of what happens in 2030 if the international picture looks the same, and nobody in the Commission has answered it in public.
Banks face a narrower problem. A firm that built its expected shortfall infrastructure for the original date has carried the running cost for two years without the regulatory benefit. A firm that waited now has four months to finish. Supervisors report both patterns across the banking union, and the second group worries them more, because model approval takes longer than model building.
The temporary adjustments themselves are not simply a pause. They soften specific elements of the market risk framework for the transition, which means the version arriving in January differs from the Basel text and from what banks originally coded. Compliance teams therefore face a third specification, not a delayed second one.
The broader signal reaches past trading floors. Europe spent a decade arguing that it implements international standards faithfully while others negotiate them down. Two delays and a set of temporary adjustments complicate that claim. Officials insist the destination has not changed, only the route. Investors watching bank capital ratios will judge that when the delegated act clears scrutiny this autumn.
