The EU delays Basel's new regulations to weaken Wall Street's advantage, allowing Deutsche Bank and BNP Paribas to catch their breath.

The European Commission has launched a final complementary buffer plan aimed at avoiding temporary performance impacts on domestic banks due to stricter trading book regulations than their American counterparts. The European Commission officially adopted the proposal outlined in April of this year on Thursday, aiming to offset the capital pressure brought by the new version of the Basel Agreement by 2030. The proposal includes minor technical revisions and will be reviewed by EU member states and the European Parliament, with a review period of up to six months. The EU states that the policy is aimed at creating a fair competitive environment for its banking industry against international competitors. The US has significantly relaxed related regulatory rules with an uncertain implementation timeline, while the UK has announced that the strictest provisions will be delayed until 2028, a year later than the original EU deadline. The trading book reform is one of the global post-crisis regulatory rules finalized by the Basel Banking Supervisory Committee in 2017. The regulatory intention is to restrain banks from using aggressive risk control models and to prevent institutions from relying on underestimating position risk to reduce capital adequacy standard. This set of new market risk rules called the "Fundamental Review of the Trading Book" mainly affects a few top European banks such as Deutsche Bank Aktiengesellschaft (DB.US) and BNP Paribas. The European banking industry has previously applied for permanent exemptions from certain new rules multiple times. However, the regulators have consistently refused substantive changes to the legislation to prevent regulatory arbitrage between Europe and the US. Nevertheless, the EU has stated that it will reevaluate the entire set of rules before 2030. The European regulatory authorities stated on Thursday that this decision aligns with the top-level planning of the EU Savings and Investment Alliance, with the core goal of ensuring the global competitiveness of European multinational investment banks compared to foreign institutions. Prior to this decision, the European Commission had postponed the implementation of the plan three times due to uncertainty in US policy. Regardless of previous delays or the decision announced on Thursday, it is all based on the so-called "enabling act" in the initial EU capital proposal, so no legal modifications are necessary. If there are further adjustments to regulatory rules in the future, a new bill will need to be drafted, and it will require negotiations between the European Commission, member state governments, and the European Parliament to be implemented.