Key facts
- The UK's Prudential Regulation Authority (PRA) is facing challenges in aligning with the U.S. Federal Reserve's evolving standards for trading book capital.
- These changes relate to the Fundamental Review of the Trading Book (FRTB) framework.
- Industry participants are concerned that the PRA's difficulty in keeping pace could grant U.S. banks a competitive advantage in terms of capital requirements.
- The PRA has been observed to miss regulatory alignment deadlines or adjustments.
The Prudential Regulation Authority (PRA) in the UK is encountering difficulties in adapting to the U.S. Federal Reserve's shifting interpretations and details concerning globally agreed standards for trading book capital, specifically related to the Fundamental Review of the Trading Book (FRTB).
Industry practitioners have observed these discrepancies and are expressing concern that the PRA's struggles to keep pace with the Fed's evolving approach could result in U.S. banks gaining a capital advantage. The PRA has reportedly made efforts to align with the new standards, but has been noted for missing key regulatory beats.
The article suggests that these alignment issues could place UK financial institutions at a disadvantage compared to their U.S. counterparts.