The Fundamental Review of the Trading Book (FRTB) was designed to create a more consistent and risk-sensitive framework for market risk capital. As implementation progresses, however, major jurisdictions are moving on different timelines and under different transitional arrangements.
Hong Kong implemented the Basel III final market risk framework in January 2025. The European Union is scheduled to apply FRTB from 1 January 2027, alongside temporary transitional measures intended to limit the immediate capital and operational impact. The United Kingdom is following a split timetable, with the trading-book boundary and standardised approaches applying from January 2027 and FRTB-IMA from January 2028.
For global banks, this divergence creates an operating-model challenge. The same trading activity may need to support different model-approval states, capital calculations, data requirements and reporting obligations across jurisdictions at the same time.
The EU transition adds further complexity. FRTB introduces trading-desk model eligibility, Expected Shortfall, non-modellable risk factors, enhanced backtesting and profit-and-loss attribution, while the 2027–2029 transitional framework temporarily modifies some of these mechanics.
This RegNext white paper examines the implications for:
It also provides a practical readiness framework and action roadmap for institutions managing parallel regulatory states across the same trading business.
FRTB is becoming not only a market-risk methodology challenge, but a test of banks’ ability to manage regulatory divergence operationally.
