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DNB extends non-enforcement period with respect to boundary between banking book and trading book

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DNB is extending the period during which it will take no enforcement action on the boundary between the banking book and the trading book. DNB will follow the EBA's opinion that competent authorities should not prioritise any supervisory or enforcement action in relation to the new banking book – trading book boundary provisions. The no-action letter to competent authorities is in response to the postponement of the new market risk framework known as the Fundamental Review of the Trading Book (FRTB).

Published: 16 August 2024

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FRTB must first be applied in full

On 24 July 2024, the European Commission adopted a delegated act postponing the date of application of the EBA have published explanatory notes on the postponement. The EBA published a no-action letter stating that competent authorities should not prioritise any supervisory or enforcement action in relation to the new banking book – trading book boundary provisions until the full implementation of the FRTB as a capital requirement.

Relevant CRR3 provisions will not yet be enforced either

In its no-action letter, the EBA clarifies that its previous opinion of 27 February 2023 remains in full force, and calls on competent authorities not to prioritise enforcement of the provisions on the banking book – trading book boundary provisions introduced in the Capital Requirements Regulation (CRR2). The EBA is extending its opinion to new banking book – trading book boundary provisions introduced in the revised Capital Requirements Regulation (CRR3), effective from 1 January 2025.

Applicable to credit institutions under DNB's direct supervision

DNB will follow the EBA’s opinion for credit institutions under its direct supervision. Nevertheless, DNB considers it important for credit institutions to prepare in good time for full implementation of the new market risk framework and the new provisions setting the boundary between the banking book and the trading book.

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