UK Basel 3.1 Reforms Finalised

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UK Basel 3.1 reforms finalised: rules set for implementation from 2027

Final rules published; implementation from 2027
The PRA has finalised the UK Basel 3.1 rules, confirming a 1 January 2027 start date and providing firms with the certainty needed to complete implementation plans.

Near-final package largely confirmed
The final package broadly reflects the near-final proposals in PS17/23, PS9/24 and PS7/25, with no substantive policy changes and only limited clarifications.

Market risk: targeted adjustments and phased FRTB rollout
The PRA has finalised targeted adjustments to the Basel 3.1 market risk framework. The FRTB internal model approach will apply from 1 January 2028, with firms continuing to use existing internal models or standardised approaches until then. In CP17/25, the PRA consulted on four adjustments—now finalised in PS9/24—covering: a one-year delay to FRTB-IMA with non IMA positions moving to the new standardised approaches from 2027; simplifications for CIUs via de minimis thresholds and an adjusted look through threshold; a permissions regime for limited cases where the residual risk add on is considered disproportionate; and transitional reporting and disclosure changes, including retention of existing IMA templates until 2028. All four proposals were implemented as consulted, with the exception of the market risk look-through approach eligibility de minimis threshold which was lowered to 50%, reflecting feedback on operational challenges.

Integrated into wider UK banking capital framework reforms
As part of the wider reform of the UK banking capital framework, the package incorporates selected operational simplifications, embeds related changes such as the Strong and Simple framework and retirement of the refined Pillar 2A methodology, and aligns the rulebook with the UK’s post-Brexit regulatory regime.

Sector moves into implementation phase
With the rules now final, UK firms can focus on executing Basel 3.1 implementation, with the PRA indicating it will continue to engage on operational and transitional issues ahead of the effective dates.