Basel IV final rules reshape capital requirements for trading books
What happened
The Basel Committee published final implementation guidance for Basel IV's Fundamental Review of the Trading Book (FRTB), confirming new internal-model floors and a 2026 go-live date for jurisdictions that had previously signalled delays.
Who it affects
Global systemically important banks (G-SIBs), market-making desks, risk model teams, CFOs and capital planning units at investment banks.
Why it matters
FRTB materially increases risk-weighted assets for trading activities — estimates suggest 15–40% uplift in market risk capital for affected institutions. This compresses returns on fixed income and derivatives businesses.
Potential implication
Banks with large trading books should accelerate FRTB readiness programmes and stress-test capital ratios under the new floors. Some may rationalise low-margin trading lines ahead of 2026 rather than absorb capital costs.
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