Brussels has postponed the Fundamental Review of the Trading Book (FRTB) until, aligning with the UK and an undecided U.S. timeline. At the same time, the Corporate Sustainability Due Diligence Directive (CSDDD) marches on, demanding supply-chain audits that go far beyond tier-one suppliers.
Competitive Pause: Why FRTB Slips to 2027
The Fundamental Review of the Trading Book (FRTB) was already nudged to 2026, but fresh guidance from European Commissioner Maria Luís Albuquerque confirms another one‑year deferral, aligning go‑live with the Bank of England’s timeline and an as‑yet undefined U.S. schedule. European lenders warned of a “regulatory handicap” if forced to adopt ahead of Wall Street and the City.
Banks Cheer, Regulators Hedge
“There’s no advantage in being first if the race rules aren’t global.” — Bettina Orlopp, Commerzbank CEO
Executives like Commerzbank CEO Bettina Orlopp applauded the move, arguing that competitiveness trumps calendar. Meanwhile, the ECB floated a phased rollout internal model rules deferred one year; the standardised approach phased in from 2026 to keep some pressure on risk management.
Practitioner’s Quip: CSDDD’s Impossible Ask
Unlike Basel, the CSDDD pushes costs down the value chain: companies must identify, prevent, and remedy human‑rights and environmental harms across all operations, or face fines and civil liability. Parliament has already voted to delay some sustainability rules to 2028, yet due‑diligence duties remain largely intact keeping compliance officers up at night.
Should the State Step In?
Critics argue that such deep forensic auditing belongs to public authorities, not corporate ESG teams: “States have investigative powers companies don’t.” The looming question: Will Brussels carve out meaningful state‑led enforcement, or will firms shoulder the entire burden?
What Comes Next
- 2025 H2: Commission finalises legal text for the FRTB delay; phased model‑approval guidance expected from the ECB.
- 2026: Standardised‑approach capital floors begin to bite (proposal).
- 2027 (Jan 1): FRTB fully live in the EU and UK unless the U.S. slips again.
- 2028: First CSDDD reports due; scope tweaks for companies less than 1 000 employees still under debate.
The clash between market competitiveness and supply‑chain accountability is defining Europe’s rulebook. For banks, the extra year is a win; for corporates, CSDDD could turn that victory into a compliance marathon unless policymakers heed critics’ call to share the load.
The EU’s regulatory pendulum now swings both ways: banks receive an additional year to embed FRTB, while companies remain responsible for end‑to‑end human‑rights and environmental due diligence. Unless international timelines converge or public authorities take on a larger share of investigative oversight firms should prepare for intensive supply‑chain scrutiny.
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com. Cover Photo Credit: wikimedia commons
