On 12 September 2024, the Prudential Regulation Authority (the “PRA”) published the second set of near-final rules for the implementation of Basel 3.1 in PS9/24 following the publication of PS17/23 on 12 December 2023. Basel 3.1 refers to the standards of the Basel Committee on Banking Supervision (the “BCBS”) entitled “Basel III: Finalising post-crisis reforms” and published in 2017 and the BCBS standards on the fundamental review of the trading book (the “FRTB”) which were finalised in 2019.

PS9/24 is published against a backdrop of increasing uncertainty around the implementation of Basel 3.1 around the globe. In the EU, CRR3 implements the bulk of Basel 3.1 with effect from January 2025, although the effective date of the FRTB has been delayed until 1 January 2026, whilst the output floor is subject to material reliefs granted to firms on top of the transitional phase-in proposed by the BCBS. In the US, an initial set of proposals that included largely abolishing modelling permissions for credit risk received such significant pushback from the banking industry that regulators have agreed heavily to revise their proposals with a second round of consultations to begin shortly.

For a high-level overview of the key PRA proposals, please download our flyer below.