FRTB — the Fundamental Review of the Trading Book — is the market-risk half of Basel 3.1, and in the UK it now arrives in two waves: the standardised approach lands with the rest of Basel 3.1 on 1 January 2027, while the internal model approach (IMA) is deferred to 1 January 2028, with the PRA consulting through 2026 on softening the model framework's sharpest edges. For banks and investment firms with trading books, the strategic question has quietly inverted: not "how do we get IMA approval" but "is IMA worth having at all" — and most of the industry's revealed answer is no.
What FRTB changes
The regime rebuilt market-risk capital after the crisis-era patches. The standardised approach becomes genuinely risk-sensitive — a sensitivities-based calculation across risk classes with default and residual add-ons — and, crucially, becomes the fallback every desk lands on when models fail, as well as the calculation every bank must be able to run (distinct from Basel's aggregate output floor, which is its own mechanism). The IMA replaces VaR with expected shortfall (capturing tail risk at 97.5%), imposes capital add-ons for non-modellable risk factors (positions without enough observable market data to model honestly), and polices itself desk by desk: approval is granted per trading desk, and each desk must keep passing the P&L attribution test — proving the risk model's risk-theoretical P&L tracks the front office's hypothetical P&L (backtesting against VaR is the separate, parallel test) — or fall back to standardised. The architecture's intent is exacting model discipline; its practical effect has been to make internal models expensive to earn and easy to lose.
The UK timetable, precisely
After successive delays, the PRA's final rules set 1 January 2027 for Basel 3.1 including FRTB's standardised approach, with the IMA deferred to 1 January 2028 — explicitly to stay aligned with other major trading jurisdictions while the US re-works its own endgame proposal (whose calibration and timing remain genuinely unsettled, a level-playing-field anxiety the PRA has acknowledged rather than resolved). The June 2026 consultation would soften the IMA's entry: the P&L attribution test run as monitoring-only for three years before it bites capital, more targeted NMRF identification, and transitional relief for banks running mixed IMA-and-standardised books. Those adjustments were consultation-stage proposals; the 2027/2028 dates are made rules, and implementation programmes should be built on them.
The strategic reality: standardised is the new normal
Industry reporting has been consistent for two years — and it is trade-press reporting rather than published supervisory data, so treat it as the market's direction of travel rather than a count: few UK banks appear to be pursuing IMA approval, and several existing model users are reported to be letting approvals lapse into standardised. The economics explain it — desk-level approval, ES infrastructure, NMRF data sourcing and perpetual PLAT jeopardy cost millions to run, against a standardised approach that is no longer punitive and a capital benefit that can evaporate with one failed test. For most institutions the 2027 programme is therefore a standardised-approach data and systems build: sensitivities produced to the regulatory taxonomy, trading/banking book boundary policed under the stricter rules, and reporting rewired — demanding work, but project-shaped rather than model-approval-shaped. The IMA case survives mainly at the largest trading operations, and even there increasingly desk-selective.
Who should be doing what now
For banks and PRA-designated investment firms: the 2027 wave is months away — boundary analysis, sensitivities sourcing, capital impact runs and dry-run reporting belong in this year's plan, with the IMA decision (pursue, defer, abandon) made deliberately and minuted, since "drift into standardised" and "choose standardised" look identical in capital but very different to a supervisor. For FCA-regulated investment firms outside the PRA's scope, the IFPR regime — not FRTB — remains the frame, but counterparty banks' FRTB costs flow into pricing and clearing terms; the change reaches further than its regulatory perimeter. And for audit committees at affected firms, Basel 3.1 lands in the same 2027 reporting seasons as IFRS 18 and the wider controls agenda — the capital numbers feeding Pillar 3 disclosures deserve the same lineage discipline as the accounts.
Acumon supports the second and third lines of this work — financial services audit, model governance and data-lineage assurance through outsourced internal audit, and risk framework reviews ahead of supervisory scrutiny. The firms that will have a quiet 2027 are the ones treating FRTB as a data programme with a governance wrapper — and starting it before the PRA's timetable does.