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Background: the Basel Committee & Capital

• The Basel Committee, first established in 1974, is made up of international banking regulators. It 

operates as a global standard setting body where regulators agree on what minimum standards to 

apply. 

o The U.S. Prudential regulators (i.e. Federal Reserve, OCC, and FDIC) are all represented on the 

Committee and jointly set minimum regulatory capital requirements for banks operating in the 

U.S.

o The BCBS introduced significant revisions to the Basel Framework following the 2008 Financial 

Crisis.

• The U.S. Prudential regulators published an initial set of Basel III rules in 2013.

• In July of this year the regulators proposed new capital rules based on the framework agreed upon 

by the Basel Committee. These rules are referred to as: the Basel III Endgame.

• The intended go-live date is July 2025 with a three-year phase-in period for some aspects of the 

proposal. 

o The proposed rule is intended to align U.S. capital rules with the Basel Framework.

Background
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Basel III Regulatory Timelines

Regulatory Timeline

Capital in the system has increased substantially. In the 

U.S., GSIB capital has increased by over $800 billion, an 

increase of over 200% compared to 2008.

• The EU is expected to final the Basel III endgame 

rules by end of this year and enter into force by 

Q1 2024 with a go-live date of 1 Jan 2025.

• The UK is expected to publish its full set of final 

rules Q3 2024, but the trading book portions will 

be finalized by year end with a go-live date of 1 

July 2025.

* Basel go-live timeline delayed by one year due to Covid
Why is Basel III Endgame Impactful?

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Impact Overview

Simplified Illustration of Capital Stacks

Standardized is generally the binding constraint under the current rule for US GSIBs due to higher risk weighted 

assets (RWA) and the applicability of the stressed capital buffer.

US Standardized does not include CVA and operational risk. 

However, under the proposed rule, operational risk and CVA become part of the binding constraint in the form 

of the expanded risk-based approach (ERBA). Therefore, going forward, both RWA components are included in 

the capital requirements for calculating the total required capital.

Current US - Minimum Risk-Based Capital Requirement Endgame Proposal - Minimum Risk-Based Capital Requirement

Credit Risk

Market Risk

Standardized Approach 

(US-SA) 

Credit Risk

Market Risk

CVA

Ops Risk

Credit Risk

Market Risk

Standardized Approach 

(US-SA) 

Expanded Risk Based Approach

(ERBA)

Credit Risk

Market Risk

CVA

Ops Risk

Advanced Approach 

(US-AA)
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Based on the year-end of 2021 data and QIS reports of large banking organizations, the US Agencies estimate 

that the increase in RWA associated with trading activity (market risk RWA, CVA risk RWA, and attributable 

operational risk RWA) would be around $880 billion for large holding companies relative to the Current US 

Standardized Approach. This translates to an overall increase of 157% for trading activities.

Impact Overview

Basel III 

Proposed ($bn)

Current US 

Standardized (

$bn)

Difference 

($bn)

Increase 

(%)

Market Risk* 980 560 420 75%

CVA Risk* 288 0 288

Attributable 

operational risk 172 0 172

Total 1440 560 880 157%

Trading Activity – RWA Impact associated with moving from US-SA to ERBA as a Total Capital Binding Requirement

* Table 1. Risk-weighted Assets (RWA) by Risk Category ($ Billion, year-end 2021), Regulatory capital rule: 

Amendments applicable to large banking organizations and to banking organizations with significant trading 

activity

Market 

Risk

Market 

Risk

Attributab

le Ops Risk

CVA Risk

Current Standardized Proposed Expanded

Risk-Based

+ 157% 

RWA under 

NPR

Impact to Trading Activities