Regulatory Alerts2026-06-19
PRA sets out adjustments to its market risk internal model approach under Basel 3.1
The Prudential Regulation Authority (PRA) has published a consultation on adjustments to the internal model approach (IMA) for market risk, representing the final stage of Basel 3.1 implementation in the UK. This consultation proposes targeted changes to support international alignment and proportionality, including extending the profit and loss attribution test monitoring period, adjusting treatment for limited trading data, reducing barriers to full IMA approval, and introducing operational simplifications. These adjustments aim to ensure appropriate capitalization of trading activities by UK banks and are intended for implementation on 1 January 2028, while other Basel 3.1 rules take effect in January 2027.
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