DNB Extends Non-Enforcement Period for Banking and Trading Book Boundary

Key Takeaways

• De Nederlandsche Bank (DNB) has extended its period of non-enforcement regarding the boundary between the banking book and the trading book.
• This decision follows guidance from the European Banking Authority (EBA) to mitigate operational complexity and legal uncertainty during the implementation of revised market risk frameworks.

Deep Dive

This regulatory update signifies a temporary reprieve for credit institutions under DNB's direct supervision. The regulator has signaled that it will not prioritize supervisory or enforcement action regarding FRTB boundary provisions or related reporting requirements for the time being. For compliance teams, this means that while the regulatory expectation remains, the immediate pressure of formal enforcement actions is deferred, allowing more breathing room for technical adjustments.

The update is driven by the European Commission’s third Delegated Act (DA) of 4 June 2026, which introduced temporary operational adjustments to the Fundamental Review of the Trading Book (FRTB). The EBA has specifically recommended that competent authorities avoid prioritizing enforcement to manage the significant operational complexity and legal uncertainty currently associated with these revised market risk frameworks.

The critical deadline for this non-enforcement period is 31 December 2029. Compliance professionals must note that while enforcement is not a priority, this is not a "hands-off" period. DNB explicitly stated that institutions are expected to continue their preparations for the full implementation of the revised market risk framework, including all provisions governing the boundary between the banking and trading books.

For compliance professionals, the recommended action is to maintain momentum on all FRTB-related implementation projects. Use this extended window to finalize data lineage, reporting controls, and internal validation processes. Relying solely on the lack of enforcement could lead to significant "catch-up" risk as the 2029 deadline approaches.

The risk implications involve a balance between operational readiness and regulatory compliance. While the immediate risk of fines or formal reprimand is lowered, there remains an inherent operational risk if institutions fail to utilize this period effectively. Failure to prepare for the full implementation could result in significant capital adequacy issues or reporting inaccuracies once the non-enforcement period expires.

Source: De Nederlandsche Bank