The Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025 have been published, accompanied by an explanatory memorandum. This follows the draft version of the Regulations which were laid before the UK Parliament in October. The Regulations are part of the UK's continued process to repeal and replace assimilated EU financial services law following Brexit under the Financial Services and Markets Act 2023 (FSMA 2023). Under section 1 of FSMA 2023, several provisions of the UK Capital Requirements Regulation (UK CRR) will be revoked, effective from 1 January 2026, by virtue of the FSMA 2023 (Commencement No. 10 and Saving Provisions) Regulations 2025. These provisions, which set prudential standards for credit institutions and investment firms, will largely be replaced by rules made by the UK Prudential Regulation Authority (PRA) and the Bank of England.

The Regulations make consequential technical amendments to UK legislation following the revocation of certain provisions of the UK Capital Requirements Regulation (CRR) relating to the definition of capital and total loss absorbing capacity (TLAC) requirements. The Regulations amend: (i) Section 3 of the Banking Act 2009; (ii) Articles 64(2) and 68(2) of the Bank Recovery and Resolution (No 2) Order 2014; (iii) Regulation 7(6) of the Financial Conglomerates and Other Financial Groups (Amendment. etc.) (EU Exit) Regulations 2019; and (iv) the definition of relevant requirement in Regulation 2 of the Bank Levy (Loss Absorbing Instruments) Regulations 2020. The Regulations come into force on 1 January 2026.

The UK Financial Conduct Authority (FCA) has published an engagement paper launching a review of market risk capital requirements for FCA investment firms. The IFPR sets specific prudential requirements for FCA investment firms, including rules on how much capital they must hold to cover potential losses from investments. These requirements are currently based on the UK Capital Requirements Regulation (UK CRR), which was originally designed for banks. The FCA notes that the harm caused by an investment firm failing may be less than that of a bank, suggesting scope for more proportionate capital rules.

The review will focus primarily on the current requirements in the FCA's prudential MIFIDPRU sourcebook specifically sections 4.11 (trading book and dealing on own account: general provisions), 4.12 (K-NPR requirement), and 4.13 (K-CMG requirement), as well as the corresponding sections of the UK CRR as it stood on 31 December 2021.

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The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) on the threshold of activity at which designated credit institutions and central securities depositories (CSDs) providing 'banking-type ancillary services' to a designating CSD must comply with the prudential risk management requirements set out in Articles 54(4) and 54(4a) of the Central Securities Depositories Regulation (CSDR). Banking-type ancillary services include activities such as providing cash accounts to, and accepting deposits from, participants in a securities settlement system, and payment services involving the processing of cash and foreign exchange transactions. The draft RTS were consulted on in March, following which, only minimal changes have been made.

Key provisions in the draft RTS include: (i) a minimum threshold set at EUR3.75 billion and 1.5% of annual settlement volume, while the maximum threshold is EUR6.25bn and 2.5% of annual settlement volume; (ii) introducing a dynamic threshold that adjusts according to the risk profile of both the designating CSD and the designated credit institution, with a corresponding increase in prudential and risk management requirements as activity levels rise; and (iii) accompanying risk management and prudential measures which are proportionate to the threshold.

The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) on the treatment of structural foreign exchange (FX) positions under the Capital Requirements Regulation (CRR). The draft RTS, developed under Article 104c of the CRR (inserted by the CRR III), build on the EBA's 2020 guidelines and were consulted on in October 2024. Most provisions from the existing EBA 2020 guidelines are retained, with a few notable changes including: (i) allowing institutions to consider only credit risk own funds requirements when determining the maximum open position that neutralises sensitivity to capital ratios, where credit risk is the main driver of ratio variability; (ii) providing further guidance on how institutions should remove FX risk positions from own funds requirements; and (iii) introducing dedicated provisions for currencies that are illiquid in the market, including those impacted by EU restrictive measures. The final draft RTS will be submitted to the European Commission for endorsement, following which they will enter into force on the 20th day following publication in the Official Journal of the European Union.

The European Central Bank (ECB) has announced it will conduct a geopolitical risk reverse stress test on 110 directly supervised banks in the Single Supervisory Mechanism in 2026. In a reverse stress test, a pre-defined outcome is set, and each bank defines the scenario in which that outcome would materialise. This exercise will complement the 2025 EBA stress test, which applied a common scenario for all banks and resulted in varying differences in their capital depletion. The 2026 stress test will focus on how geopolitical risk could affect banks' business models, who should identify relevant geopolitical events and quantify their impact. Additionally, the banks will be asked to describe how they would act to reduce that impact, if necessary, with a view to ensuring that they have robust governance and operational resilience frameworks in place.

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The Financial Services Regulatory Initiatives Forum has published the ninth edition of the Regulatory Initiatives Grid. This sets out the regulatory pipeline for the next two years, outlining 124 live initiatives which is a 13% reduction since the last grid was published. Key priorities include implementing Basel 3.1 standards, advancing the strong and simple prudential framework and reforms to the prospectus regime and wholesale markets review. Innovation-focused measures cover stablecoin regulation, the national payments vision, and development of a UK captive insurance regime, while consumer-focused reforms include the advice guidance boundary review and regulation of buy now pay later products. The Grid also highlights efforts to streamline regulatory processes, with 45 joint initiatives across sectors, and provides indicative timelines for consultations and implementation through 2027. Separate press releases announcing the Grid have also been published by the UK Financial Conduct Authority and the Bank of England.

The European Central Bank (ECB) has contributed to the EU's ongoing simplification agenda by endorsing a series of recommendations for simplification of the EU prudential framework. A total of 17 recommendations were made by the ECB's High-Level Task Force on simplification across the regulatory, supervisory and reporting frameworks. Key proposed changes include: reducing the number of capital stack elements in the EU risk-weighted framework; expanding the scope of small banks that would qualify for a simplified regulatory framework as small and non-complex institutions (SNCI); giving the ECB Governing Council responsibility for taking a holistic view of the overall level of capital demand across the banking union; and completing the banking union, including finalisation of the European Deposit Insurance Scheme.

Although the recommendations advocate for simplification, they are based on core principles that resilience should be maintained, supervisory bodies should be able to meet their prudential objectives and international standards should be upheld. The ECB will present the recommendations to the European Commission, which is expected to present a report on the banking system in 2026.

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The European Systemic Risk Board (ESRB) has published a report accompanied by an annex, proposing to simplify its legislative tasks following a review by the High-Level Group. The ESRB currently performs around 90 tasks under EU law beyond its Regulation. Using a new scoring framework whereby tasks with lower scores may be discontinued, whereas tasks with higher scores remain unchanged, the ESRB identified approximately 30 tasks for discontinuation or streamlining, primarily by removing legal references or reducing involvement thresholds. The assessment is presented in detail in the annex.

These proposals build on previous ESRB recommendations in its 2022 Concept Note and discussions at the March 2025 European Commission Expert Group on Banking, Payments and Insurance, which called for: (i) a proportional approach to sectoral systemic risk buffer rates aligned with total risk exposure amounts; (ii) consolidation of the Capital Requirements Regulation provisions on macroprudential risk weights (Articles 124, 164 and 458) into a single section or article with simplified activation procedures; and (iii) mandatory reciprocation for systemic risk buffer and Article 458 measures, subject to materiality thresholds. The ESRB's proposals will be submitted to the EC for consideration as part of targeted legislative amendments.

Commission Implementing Regulation (EU) 2025/2303 has been published in the Official Journal of the European Union. The Regulation lays down updated implementing technical standards on procedures, standard forms and templates for the provision of information required for resolution plans under the Bank Recovery and Resolution Directive (BRRD) (Directive 2014/59/EU). This Regulation repeals Implementing Regulation (EU) 2018/1624 and introduces a revised set of templates to enhance harmonisation of reporting obligations across the EU, reflecting amendments to BRRD and the experience gained by resolution authorities. Key changes include: (i) differentiated reporting requirements for resolution entities, liquidation entities, and entities belonging to resolution groups; (ii) thresholds for identifying relevant legal entities; (iii) adoption of a single data point model subject to common validation rules, and provisions to avoid duplication of data collection between competent and resolution authorities. The Regulation will apply from 30 December.

The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) amending Delegated Regulation (EU) 2023/206 which supplements Regulation (EU) No 575/2013 (CRR). The EBA is mandated by Article 124(11) of the CRR to draft RTS which specify: (i) the types of factors to be considered by national authorities in assessing the appropriateness of the risk weights for exposures secured by immovable property; and (ii) the conditions to be considered for the assessment of the appropriateness of minimum loss given default values for exposures secured by immovable property. The only amendment identified to the existing RTS is an update of relevant legal references to align with the revised CRR (CRR3) framework. Following the April consultation, no changes were made to the draft RTS noting no responses were received. The RTS will now be submitted to the European Commission for endorsement before being published in the Official Journal of the European Union.

Commission Implementing Regulation 2024/2475 has been published in the Official Journal of the European Union (OJ). The regulation makes amendments in relation to the implementing technical standards (ITS) on operational risk supervisory reporting of institutions for the purposes of article 430(7) of the Capital Requirements Regulation (CRR). The ITS specify uniform reporting formats and IT solutions, including instructions, for supervisory reporting requirements of institutions. The current ITS were revised in the context of the Basel III reforms and the resulting CRR amendments, with an earlier implementing regulation setting out the incoming replacement ITS, and repealing the existing ITS, published in the OJ last year. This current implementing regulation extends certain transitional provisions to reflect the postponement of the date of application of the incoming CRR own funds requirements for market risk to 1 January 2027, and to delay the repeal of the existing ITS. The implementing regulation will enter into force on 29 December.

The UK Financial Conduct Authority (FCA) has published an updated webpage confirming that following the closure of its consultation on capital deductions for redress (CP23/24), it will not proceed with the proposed capital deduction for redress framework. This decision reflects a realignment of regulatory priorities in light of broader changes affecting the advice market. The FCA expects firms to continue addressing redress liabilities under existing rules, including the consumer duty, and warns that it may intervene where firms fail to meet these expectations or pose a risk of harm. Supervisory focus will include provisions for redress liabilities in client book transfers and challenging firms at the gateway, with firms expected to adhere to the FCA's "polluter pays" principle as outlined in its prior communications.

The UK Prudential Regulation Authority (PRA) has published policy statement PS27/25 following its September consultation setting out proposals to delete certain regulatory reporting requirements for banks, building societies and designated investment firms. The consultation was part of the PRA's work to reduce the regulatory burden for those PRA-regulated firms under the regulator's future banking data review and focused on Financial Reporting (FINREP) templates. The policy statement confirms the deletion of 37 templates (as per the consultations proposals) and notes in particular feedback from respondents regarding further reforms under the future banking data review workstream. The revised rules and amended guidance will come into effect on 31 December and will apply to reporting reference dates that fall on that day.

The UK Prudential Regulatory Authority (PRA) has published a policy statement confirming the complete withdrawal of supervisory statement SS20/15 on building societies' treasury and lending activities, without replacement. Following the May consultation, the final policy largely remains unchanged. The PRA concludes that SS20/15 is no longer aligned with its broader policy approach, it creates a potential level-playing field issue by imposing prescriptive expectations on building societies that do not apply to banks, and is unnecessary given the sector's improved risk management sophistication and existing supervisory tools. The policy also makes consequential amendments to SS31/15 (ICAAP and SREP) and clarifies that ongoing risk management expectations for building societies will align with those applicable to banks under other supervisory statements. Following consultation feedback, the PRA brought forward the implementation date of 1 January 2026, with the withdrawal now effective immediately from publication.

The European Banking Authority (EBA) has launched a consultation on draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the revised Capital Requirements Directive (CRD VI) concerning prudentially material transactions. The RTS specify the minimum information to be provided, common assessment methodology, and processes for notifications and prudential assessments of material acquisitions, transfers of assets or liabilities, mergers, and divisions, while the ITS establish common procedures, forms and templates for cooperation between competent authorities. The draft RTS embed proportionality by exempting information already held by authorities, using documents prepared for mergers or divisions under the Company Law Directive, coordinating with related procedures (e.g., authorisation of credit institutions where the merger requires a new licence), and allowing flexibility for divisions given their rarity.

In the absence of a materiality threshold in the CRD, they also introduce some proportionality criteria for notifications and assessments, especially for mergers involving small, non-complex or intra-group institutions, to streamline implementation of the merger. Building on common information requirements and terminology, the RTS clarify complex aspects and supplement Level 1 provisions. The deadline for comments is 5 March 2026, with a virtual public hearing scheduled for 4 February 2026. Final draft RTS and ITS are due for submission to the European Commission by July 2026 (RTS) and January 2027 (ITS).

The Basel Committee on Banking Supervision (BCBS) has launched a consultation on introducing a standard format for machine-readable Pillar 3 disclosures by internationally active banks. Most banks currently publish their disclosures in PDF format only, which makes it difficult to aggregate, process and compare data across banks. The proposal aims to enhance accessibility and comparability of key risk metrics by requiring quantitative disclosures to be published in a standardised machine-readable format, without altering existing disclosure requirements. National supervisors would determine whether banks should publish machine-readable Pillar 3 disclosures on their own websites or via a centralised data repository. The deadline for comments is 5 March 2026.

The Bank of England (BoE) has launched its second system-wide exploratory scenario (SWES) exercise, this time focused on the private markets ecosystem. It will be run in collaboration with a group of banks and NBFIs active in these markets. Its aim is to better understand how banks and non-banks active in private markets would respond to a severe but plausible global downturn, how their actions interact at a system level, and whether these interactions can amplify stress across the financial system and pose risks to UK financial stability and the provision of finance to the UK real economy. The exercise is not a test of the resilience of the individual firms that will participate in the exercise. Its focus is system wide, exploring the resilience of the provision of private market and related public market finance to the UK corporate sector. It will focus on private equity (PE) sponsored UK corporates, credit originated to finance these corporates (including leveraged loans and high-yield bonds) and broader private credit (PC) provided to the UK corporate sector. The SWES will aim to include key participants in the private markets ecosystem. This includes alternative asset managers that manage PE and PC funds; large banks that provide credit to both private market funds and PE-sponsored corporates; and institutional investors that participate in private markets and related public markets. The BoE anticipates having largely completed firm engagement and analysis in 2026, with the final report to be published in early 2027 and interim findings over the course of 2026.

The UK Prudential Regulation Authority (PRA) has published a policy statement and supervisory statement SS4/25, updating expectations for banks and insurers on managing climate-related financial risks. The final policy replaces SS3/19 in its entirety and applies with immediate effect. Following feedback from the April consultation, the PRA makes changes to the final policy (i) clarifying proportionality, allowing firms to tailor governance and risk management based on materiality and business models; (ii) recognising litigation risk as a potential transmission channel; and (iii) confirming that the six-month review period is to conduct an internal gap analysis, not an implementation timeline. Firms may integrate climate responsibilities within existing governance frameworks and embed climate risks into current risk registers or sub-registers, with flexibility in approach. The PRA emphasises a principles-based, proportionate framework aligned with international standards, encouraging scenario analysis, reverse stress testing and engagement with the Climate Financial Risk Forum (CFRF).

The European Banking Authority (EBA) has published a consultation paper on draft amendments to the regulatory technical standards (RTS) under Delegated Regulation (EU) 2017/390, supplementing the Central Securities Depositories Regulation (CSDR) prudential framework. The changes respond to the CSDR Refit (Regulation (EU) 2023/2845), which now permits banking CSDs to provide banking-type ancillary services to participants of other CSDs, including foreign currency cash settlement. This expansion introduces potential credit, liquidity, and concentration risks, prompting the EBA to propose updates to prudential requirements, including enhanced frameworks for intraday credit and liquidity risk management, credit limits and collateral management. The draft RTS also aligns references with amendments made to the Capital Requirements Regulation. The deadline for comments is 3 March 2026.

The Bank of England's (BoE) Financial Policy Committee (FPC) has published a Financial Stability in Focus report, revisiting its assessment of bank capital requirements. The FPC now judges that the appropriate benchmark for the system-wide level of Tier 1 capital requirements is around 13% of risk-weighted assets, equivalent to a Common Equity Tier 1 (CET1) ratio of around 11%. This represents a reduction from the 2019 assessment, which set the benchmark at 14%, reflecting improvements in risk measurement, a lower systemic importance of some banks, and a decline in banks' average risk weights.

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The UK Prudential Regulation Authority (PRA) has published a letter addressed to credit union directors. It summarises key findings from its 2025 assessment of credit unions with assets up to GBP50 million and sets out supervisory priorities for 2026. The PRA identifies operational resilience as a key risk, with thematic work planned in 2026 to strengthen this area, including contingency planning and ensuring robust arrangements for replacing key staff and directors. The second key risk highlighted is disorderly failure: boards are expected to monitor prudential positions and financial forecasts proactively, act promptly on emerging issues and consider alternatives where activities become unsustainable, to avoid disorderly wind-down. In addition to these priorities, the PRA will maintain a focus on risk management throughout 2026. Governance standards also remain a priority, with emphasis on reducing dependency on key individuals and improving risk oversight. Areas for continued attention include succession planning, policy reviews, business planning and board performance appraisals (noted as a non-exhaustive list). The PRA reminds credit unions of their regulatory obligations, including maintaining open and cooperative engagement under Fundamental Rule 7. The letter should be read alongside the January Dear CEO letter to UK deposit takers, which outlines the PRA's priorities in this sector.

The UK Financial Conduct Authority (FCA) has published findings from its data quality review of prudential regulatory reporting by MIFIDPRU investment firms, covering submissions from January 2024 to March 2025. The FCA found that 60% of firms passed all data quality tests and saw good practice in reporting across time periods and accurate cross-validation returns. However, the FCA identified significant areas for improvement firms, including: (i) inconsistent reporting across multiple data sources; (ii) inaccurate implementation of reporting guidance; (iii) incorrect reporting of type of investment firm; and (iv) incorrect reporting units and data entry issues. From the 10% of firms that were not meeting their reporting requirements, the FCA found recurring reporting errors, indicating weaknesses in these firms' regulatory systems and controls.

The FCA urges firms to review their reporting processes against the relevant provisions in its Handbook, including MIFIDPRU 9 Annex 2, and ensure accuracy, noting that no new requirements or guidance are being introduced. Notifications highlighting data quality failures will be issued to firms and further detailed examples of data quality issues the FCA has seen will be shared in an upcoming IFPR Newsletter.

The European Banking Authority (EBA) has published a peer review report assessing how competent authorities have implemented and supervised gender diversity requirements. EU legislation requires that credit institutions have robust governance arrangements, including gender-neutral remuneration policies and diversity policies. The review examined six competent authorities, including the European Central Bank, on the application of the respective requirements under the fourth Capital Requirements Directive (CRD IV), the Capital Requirements Regulation and certain EBA guidelines across six major areas. It found that most requirements checked have been fully or largely incorporated into the supervisory framework by all supervisors reviewed.

However, deficiencies were noted, particularly in the use of supervisors' own benchmarking of diversity practices, where three supervisors were rated "partially applied" overall, with five out of six supervisors being rated "partially applied" on the second criteria of that benchmark, which concerns the further use of own diversity benchmarking results. The EBA recommends improvements in collecting and publishing supervisors' benchmarking results to enhance transparency and to improve the ability of credit institutions to compare with their peers. Both individual and general follow-up measures, as well as best practices have been adopted to strengthen consistency and effectiveness across the EU. The EBA will conduct a follow-up peer review of the implementation of the measures included in the report in two years.

The European Banking Authority (EBA) has published a fact sheet summarising the findings from its 2025 mapping exercise on the interaction between the EU AI Act (Regulation EU 2024/1689) and existing banking and payments legislation. This includes the Capital Requirements Regulation (575/2013), the Consumer Credit Directive (2008/48/EC), the Mortgage Credit Directive (2014/17/EU) and the Payment Services Directive ((EU) 2015/2366). The EBA's key findings include: (i) no significant contradictions have been found between the AI Act and EU banking and payment legislation; (ii) the AI Act is complementary to EU banking and payment sector legislation, which already provides a comprehensive framework to manage risks. However, some efforts may be required by banks and other financial institutions to integrate the two frameworks effectively; and (iii) the co-existence of multiple authorities supervising financial entities' compliance highlights the importance of supervisory cooperation to ensure effective implementation of the AI Act.

The EBA also concludes that no immediate changes to its guidelines or new EBA guidelines are planned. Instead, the EBA will follow up with actions to contribute to a common supervisory approach to supervisory cooperation and implementation of sectoral requirements alongside AI Act requirements. The EBA will undertake specific activities in 2026–2027 to support the implementation of the AI Act in the EU banking and payments sector by: promoting common supervisory approaches and cooperation among national competent authorities responsible for financial sector supervision and market surveillance authorities; and providing input to the AI office, as appropriate, and participating in discussions of the AI Board Subgroup on Financial Services.

Commission Implementing Regulation (EU) 2025/2338 (Amending Regulation) has been published in the Official Journal of the European Union. The amendments update the implementing technical standards (ITS) under Commission Implementing Regulation (EU) 2016/100, which govern the joint decision process for competent authorities when granting permission to use internal models for credit risk, counterparty credit risk and market risk for prudential purposes for certain entities in banking groups, as required by Article 20(8) of the Capital Requirements Regulation (CRR). The Amending Regulation introduces three key changes: (i) the removal of the Advanced Measurement Approach for operational risk, reflecting amendments to the CRR by CRR III (Regulation (EU) 2024/1623); (ii) the alignment with new RTS and ITS on the functioning of supervisory colleges that were published in August (Commission Delegated Regulation (EU) 2025/791 and Implementing Regulation (EU) 2025/790); and (iii) Commission Delegated Regulation (EU) 2025/1496, which sets out that the current requirements on the calculation of own funds requirements for market risk will apply until 1 January 2027. The Amending Regulation enters into force on 11 December.

The Basel Committee has published a summary of its latest meeting in which members discussed a range of initiatives. The Committee reaffirmed its commitment to full and consistent implementation of Basel III standards and approved final principles for managing third-party risk in banking, which will be released next month. It also agreed to expedite a targeted review of its prudential standard for banks' cryptoasset exposures in response to market developments. Other priorities include examining synthetic risk transfers (SRTs), consulting on machine-readable Pillar 3 disclosures (expected in December) and consolidating guidelines into a more user-friendly format. The Committee also approved assessment reports on the UK implementation of the net stable funding ratio and large exposures framework, which are expected next month, and committed to pursue further analytical work of financial risks from extreme weather events.

The European Central Bank (ECB) has published the results of its 2025 supervisory review and evaluation process (SREP) and supervisory priorities for 2026–2028. The review covers 105 banks under ECB supervision and looks at their capital, liquidity, profitability, governance and risk management. Overall, banks maintained robust capital and liquidity positions and strong profitability in the second quarter of 2025.

Looking ahead, the ECB's supervisory priorities for 2026–2028 reflect a comprehensive assessment of emerging risks and vulnerabilities for supervised entities. Each supervisory priority targets a specific set of vulnerabilities in the banking sector for which dedicated strategic objectives have been set and tailored work programmes developed.

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The European Commission (EC) has published a call for evidence on a proposed Delegated Act to amend market risk rules under the Fundamental Review of the Trading Book (FRTB) in Basel III. This follows the November consultation where responses are due by 6 January 2026. Although most Basel III requirements have applied since January, the EC postponed FRTB implementation on several occasions and most recently to 1 January 2027 due to delays and uncertainty regarding FRTB implementation in other major jurisdictions. As a result, the EC is evaluating whether to use the empowerment granted under Article 461a of the Capital Requirements Regulation, to adopt a Delegated Act to mitigate potential negative impacts arising from an unlevel playing field in the international implementation of the FRTB. It would also aim to incorporate those targeted changes already proposed by other jurisdictions that the EC believes can improve the EU framework (e.g. removing excessive rigidity and preventing excessive operational burden on banks). The deadline for responses is 18 December.

The UK Prudential Regulation Authority (PRA) has published policy statement PS24/25 on depositor protection and feedback to responses it received on its March consultation on the topic. The policy statement sets out final rules relating to the limits for deposit protection available from the Financial Services Compensation Scheme (FSCS).

In particular:

• From 1 December, the deposit protection limit increases from GBP85,000 to GBP120,000.
• From 1 December, the limit applicable to certain temporary high balance claims increases from GBP1 million to GBP1.4m.

In response to feedback, the PRA has made additional amendments to the depositor protection part of the PRA Rulebook (DPP rules). These include amending the requirement for firms to display the FSCS compensation sticker and poster to exclude branches where a firm does not deal with depositors in person, clarifying the scope of "third-party premises" to tighten the requirement and more closely reflect models such as banking hubs, and updates to the information sheet to address points raised about accessibility. Firms are required to update their single customer view systems to reflect the new limit from December 1. Deposit takers will then have up to six months to make changes to disclosure materials, which will need to be completed no later than 11.59pm on 31 May 2026.

The Financial Stability Board (FSB) has published a letter from the FSB's Chair, Andrew Bailey, addressed to G20 leaders. The letter urges G20 leaders to accelerate efforts to modernise financial regulation while safeguarding stability, citing significant gaps in reform implementation and a challenging economic outlook. The next phase of the FSB's work will look deeper into where full, timely and consistent implementation of global standards, such as Basel III, was not achieved.

The letter highlights the growing influence of non-bank financial intermediaries in global financial markets, now estimated at USD2 trillion globally, and stresses the need for robust monitoring to prevent systemic risks. It also calls for continued attention to national policy barriers to achieve the objectives of the G20 Roadmap for enhancing cross-border payments. With the rise of digital assets, the FSB calls on authorities to carefully consider how frameworks are designed to ensure they are effective, consistent, and supportive of safe innovation and notes that it will be equally important to consider how stablecoins can operate effectively and safely across borders. The FSB's work programme for the year ahead will include a focus on stablecoins and other forms of payment.

The Network for Greening the Financial System (NGFS) has released an updated guide on climate scenario analysis for central banks and supervisors, building on the 2020 edition. The revised guide reflects significant methodological progress and best practices in scenario design, data and modelling, with a new emphasis on short-term scenarios to assess near-term financial risks from climate change and evolving policy developments. While retaining the original four-step framework, which includes: (i) identifying objectives and scope; (ii) choosing climate scenarios; (iii) assessing economic and financial impacts; and (iv) communicating and using results; the guide expands on each step with new insights, methodologies and examples. It serves as a practical reference for authorities and financial institutions integrating climate scenario analysis into their risk management frameworks and will continue evolving alongside ongoing sector developments.

The UK Prudential Regulation Authority (PRA) has published policy statement PS22/25, confirming changes to the retail deposits threshold for the UK leverage ratio requirement. Following feedback on its March consultation, the PRA has amended the final policy to increase the retail deposits threshold for major UK firms from GBP50 billion to GBP75bn, compared to the GBP70bn initially proposed. It will also calculate the metric of firms' retail deposits assessed against this threshold using a three-year averaging mechanism. The non-UK assets threshold remains unchanged at GBP10bn. Modifications by consent granted during the review, which allowed firms to disapply the leverage ratio part of the PRA Rulebook while thresholds were under consideration, will cease on 30 June 2026. The final policy will take effect on January 1, 2026. The PRA will continue annual reviews of both thresholds as part of the Financial Policy Committee's oversight of the leverage ratio framework. The final policy and rules are set out in the appendices to the policy statement.

The European Central Bank (ECB) has issued its opinion on the European Commission's proposed amendments to the EU securitisation framework, which was submitted in June. The package consists of a proposal to amend the EU Securitisation Regulation, a proposal to amend the Capital Requirements Regulation as regards exposures to securitisations and a consultation on measures to amend the Liquidity Coverage Ratio (LCR) Delegated Regulation. The ECB broadly supports the reforms aimed at enhancing the functioning of the EU's securitisation market, but makes a number of general and specific observations, including that:

• Proposed changes to synthetic securitisations require careful consideration. Although this segment is driving market growth, if not properly managed by originator credit institutions, large synthetic securitisations could amplify procyclicality through rollover risk, potentially affecting financial stability.

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The Bank of England (BoE) has published a consultation paper outlining its proposed regulatory framework for sterling-denominated systemic stablecoins. Under the framework, HM Treasury (HMT) will determine which payment systems using stablecoins, and their service providers, are recognised as systemically important. Once designated, these entities will fall within the BoE's remit and be subject to its powers under the Banking Act 2009. The proposed regime does not cover stablecoins used for non-systemic purposes which are not widely used by individuals to make retail or business payments. These activities will remain under the supervision of the UK Financial Conduct Authority (FCA).The consultation builds on feedback to the 2023 discussion paper.

Key proposals include:

• Allowing issuers to hold up to 60% of backing assets in short-term sterling-denominated UK government debt, with the remaining 40% as unremunerated deposits at the BoE. Issuers deemed systemic at launch, or transitioning from the FCA regime, may initially hold up to 95% in short-term UK government debt to support viability during growth.

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The European Commission (EC) has launched a consultation on the Fundamental Review of the Trading Book (FRTB) under Basel III, focusing on market risk for banks. Although most Basel III requirements have applied since January, the EC postponed FRTB implementation on several occasions and most recently to 1 January 2027 due to delays and uncertainty regarding FRTB implementation in other major jurisdictions. To address potential negative impacts arising from an unlevel playing field in the international implementation of the FRTB, the consultation seeks feedback on whether the EC should adopt a delegated act, using its powers under Article 461a of the Capital Requirements Regulation by the end of March 2026. This empowerment, due to previous postponements, now only allows the introduction of targeted relief measures and targeted multipliers for up to three years.

Longer term solutions will be duly and timely considered in a comprehensive way. The proposed policy options comprises two main components: (i) the introduction of temporary targeted amendments to the market risk framework that would address aspects of the framework on which other jurisdictions have already deviated or indicated that they would plan to deviate in their final FRTB implementation; and (ii) the introduction of a multiplier for the overall market risk capital requirements that banks negatively impacted by the new rules (i.e., banks facing an increase in capital requirements for market risk) would be allowed to use to significantly limit their market risk capital requirements increases for three years. The EC highlights that due to the temporary nature of the multiplier and its objective, the methodology should be simple and risk‑sensitive, and relatively easy to implement, maintain and supervise. The deadline for responses is 6 January 2026.

The European Banking Authority (EBA) has published a follow-up peer review report examining the supervisory practices of EU competent authorities regarding their assessment of credit valuation adjustment (CVA) risk of the institutions under their supervision. The same four EU competent authorities which were part of the EBA's 2023 peer review were also part of this follow up review. The EBA found that competent authorities continue to largely assess CVA risk sufficiently, using approaches which are fit for purpose in satisfying the regulatory and supervisory review and evaluation process guidelines. Furthermore, since the 2023 report, all competent authorities have made progress to strengthen their CVA risk assessments and address the follow-up measures suggested as part of that report. However, only one competent authority was found to have made specific efforts to review compliance with the regulatory technical standards (RTS) in Commission Delegated Regulation (EU) 2018/728 on the procedures for excluding transactions with non-financial counterparties established in a third country from the own funds requirements for CVA risk (Exclusion RTS). The EBA urges continued efforts to ensure robust CVA risk management and compliance with the Exclusion RTS to ensure that this risk is properly managed and capitalised by the institutions under their supervision.

The European Banking Authority (EBA) has published a final report on guidelines for environmental scenario analysis under the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). These guidelines complement the EBA's January 2025 environmental, social and governance (ESG) risk management framework by clarifying supervisory expectations for how institutions should conduct environmental scenario analysis, including for institutions using the internal ratings-based approach for calculating the own funds requirements for credit risk. The EBA consulted on the guidelines in January. In response to feedback, the EBA has amended the guidelines with a focus on enhancing clarity and simplifying expectations in line with operational realities. The scope has been streamlined to focus on environmental risks, with climate as the priority. 

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The European Banking Authority (EBA) has launched a consultation on draft guidelines on the authorisation of third-country branches (TCBs) under Article 48c(8) of the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). The guidelines set out: (i) the list of information to be included in the application, concerning matters such as the business plan, capital endowment, liquidity, internal governance, booking arrangement and reporting requirements and information about head undertaking(s), in particular their compliance with prudential requirements and a reasoned, third party legal opinion on the absence of impediments in the third country's framework precluding the ability of the TCB to comply with the EU and prudential legislation and regulation; (ii) the procedure for authorisation, as well as standard forms and templates for the provision of the information required; (iii) the conditions for granting authorisation; and (iv) the conditions under which competent authorities may rely on information that has already been provided in the process of any prior authorisation third country branch authorisation.

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Commission Implementing Regulation (EU) 2025/2159 (the Regulation) has been published in the Official Journal of the European Union (OJ). The Regulation amends the implementing technical standards (ITS) laid down in Implementing Regulation (EU) 2021/2284 as regards supervisory reporting and disclosures of investment firms under the Investment Firms Regulation (IFR). Due to the changes introduced by the CRR III, the reporting framework for investment firms has been revised. Consequential changes to Implementing Regulation (EU) 2021/2284 are therefore needed. To provide investment firms with sufficient time to adapt their own internal system and to comply with the revised reporting requirements, a derogation has been laid down deferring the remittance date of the first quarterly reporting obligation after the date of application of this Regulation. The Regulation enters into force on the 20th day following publication in the OJ.

The House of Lords Financial Services Regulation Committee (the Committee) has issued a formal response to HM Treasury's (HMT) reply to its report "Growing Pains: Clarity and Culture Change Required" which evaluated the progress made by the UK Financial Conduct Authority (FCA) and UK Prudential Regulation Authority (PRA) in supporting growth and competitiveness in the financial services sector and the wider UK economy. The Financial Services and Markets Act 2023 introduced a secondary objective for the UK regulators focused on international competitiveness and growth. While welcoming initial steps taken by the UK government, the Committee notes that HMT did not engage with several key findings, critical to the success of the secondary objective and broader UK economic growth. The Committee uses this opportunity to restate some of its recommendations and raise further questions on the following themes as set out below.

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The European Banking Authority (EBA) has published its final report on the draft regulatory technical standards (RTS) under Article 382(6) of the Capital Requirements Regulation (CRR), as amended by CRR3. The RTS establish a quantitative framework for assessing the materiality of credit valuation adjustment (CVA) risk exposures arising from fair-valued securities financing transactions (SFTs). Following feedback to the July 2024 consultation, the EBA retained its proposed quantitative approach to assessing materiality, opting for a ratio-based threshold of 5% to determine whether such transactions should be included in CVA capital requirements. The final RTS also uphold quarterly assessments aligned with COREP reporting cycles and clarify that the CVA capital requirement metric, rather than broader own funds or exposure values, should be used for the materiality test.

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The European Commission (EC) has adopted a communication providing guidance clarifying how banks can benefit from preferential prudential treatment under Article 133(5) of the Capital Requirements Regulation (CRR) when investing in equity through legislative programmes, which are structured public investment schemes established under EU or national law. These programmes, which combine public support (e.g. guarantees or co-investment) with private funding and oversight mechanisms, target strategic sectors such as clean technologies, digital innovation and defence. The guidance promotes consistent application across the Single Market, enabling banks to apply lower capital charges to qualifying exposures, reflecting their reduced risk profile. This initiative supports financial stability while enhancing access to equity financing for EU companies and advancing the EC's broader goals under the Savings and Investments Union (SIU), including capital market integration and competitiveness. A public register of eligible legislative programmes has been published, as well as a website with questions and answers on legislative programmes under Article 133(5).

The UK Prudential Regulation Authority (PRA) has published near-final policy statement PS18/25, confirming its intention to retire the refined methodology to Pillar 2A capital requirements. This decision follows the 2024 consultation and is aligned with the forthcoming implementation of the Basel 3.1 standardised approach to credit risk (CR SA), now scheduled for implementation on 1 January 2027. The PRA concludes that the refined methodology to Pillar 2A, originally introduced to address conservatism in CR SA relative to the Internal Ratings-Based (IRB) approach, is no longer necessary due to improvements in risk sensitivity under Basel 3.1.

Despite mixed feedback from respondents, the PRA maintains that the retirement will simplify the capital framework, reduce operational burdens and better reflect firms' risk profiles. Implementation will take effect from 1 January 2027, aligning with the extended implementation date of Basel 3.1. Final policy materials are expected in Q1 2026, following HM Treasury's revocation of relevant Capital Requirements Regulation (CRR) provisions. Final minor amendments to policies concerning interest rate risk in the banking book (IRRBB) and pension obligation risk have also been published, with implementation deferred to 1 July 2026. The appendices to this near-final policy statement contain the PRA's near-final policy materials regarding the retirement of the refined methodology, as well as final policy materials related to IRRBB and pension obligation risk.

The UK Prudential Regulation Authority (PRA) has published near-final policy statement PS19/25, setting out its approach to restating remaining provisions of the Capital Requirements Regulation (CRR) into the PRA Rulebook and associated policy materials. This follows the 2024 consultation and complements earlier finalised proposals in the PRA's July policy statement.

The statement is structured into four chapters:

• Chapter 1 – provides an overview, summarises feedback to the consultation and outlines the scope of the near-final rules.
• Chapter 2 – covers amendments to the securitisation requirements, including updates to supervisory statements SS9/13 and SS10/18 and introduces new statements of policy (SoP7/25 and SoP8/25).
• Chapter 3 – covers other CRR provisions including the Groups Part, Credit Risk: Internal Ratings Based Approach Part, Counterparty Credit Risk Part and introduces a new Settlement Risk (CRR) Part of the Rulebook. It also updates supervisory statements SS15/13 and SS4/24 and introduces SoP6/25 on Internal Model Method permissions.
• Chapter 4 – focuses on changes related to the mapping of external credit rating agency ratings to credit quality mapping aligned with Basel 3.1 standards.

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The UK Prudential Regulation Authority (PRA) has published near-final policy statement PS20/25, marking the second and final phase of its "strong and simple" framework. This introduces a simplified capital regime for smaller, domestically focused banks and building societies, referred to as small domestic deposit takers (SDDTs). The framework aims to reduce regulatory complexity and compliance costs for these firms while maintaining their financial resilience. Phase 1, which focused on liquidity and disclosure simplifications, was finalised in the December 2023 policy statement. Phase 2, as outlined in this near-final policy statement, builds on phase 1 and incorporates feedback from the 2024 consultation.

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The Basel Committee on Banking Supervision (BCBS) has published a final technical amendment to the Basel framework, clarifying the treatment of guarantees and credit derivatives used to hedge counterparty credit risk (CCR) from derivative exposures. The technical amendment, revised following consultation feedback, applies specifically to a bank's use of fixed or capped protection and excludes securities financing transactions (SFTs) and securitisation exposures. Amendments have been made to the credit risk and CCR standards to align the treatment of guarantees and credit derivative protection with that of eligible collateral under the CCR framework.

These changes aim to clarify how fixed or capped protection should be reflected in exposure calculations and address inconsistencies in the application of the framework. As a technical amendment, it does not constitute a substantial change to the standards but resolves ambiguities that could not be addressed under the existing rules. Supervisors and the BCBS will monitor implementation and potential circumvention strategies, with the possibility of extending similar treatment to SFTs and securitisations if necessary. BCBS members have agreed to implement the amendment as soon as practical and within three years at the latest.

The European Banking Authority (EBA) has launched a consultation on its revised guidelines for the supervisory review and evaluation process (SREP) and supervisory stress testing, mandated under the Capital Requirements Directive (CRD). The proposed guidelines consolidate all relevant SREP provisions into a single, comprehensive framework as part of the EBA's efforts to simplify and enhance the EU supervisory framework. The update integrates new elements, including environmental, social and governance factors, operational resilience and mandates under the revised Capital Requirements Directive (CRD VI) relating to third-country branches and the output floor.

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The European Banking Authority has published two Q&A under the Capital Requirements Regulation (CRR): (i) 2025_7363 addresses how exposures to institutions should be treated under the Credit Risk Standardised approach, if such institutions have been waived of individual capital requirements under Article 7 of the CRR; and (ii) 2025_7470 addresses the eligibility as collateral under Article 207(2) of the CRR of secured notes designed specifically to remove any material positive correlation between the value of the note and the credit quality of its issuer.

A draft of the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025 has been laid before the UK Parliament, and published together with a draft explanatory memorandum. The draft regulations are part of the UK's continued process to repeal and replace assimilated EU financial services law following Brexit, under the Financial Services and Markets Act 2023 (FSMA 2023). Under section 1 of FSMA 2023, several provisions of the UK Capital Requirements Regulation (UK CRR) will be revoked, effective from 1 January 2026, by virtue of the FSMA 2023 (Commencement No. 10 and Saving Provisions) Regulations 2025. These provisions, which set prudential standards for credit institutions and investment firms, will largely be replaced by rules made by the UK Prudential Regulation Authority (PRA) and the Bank of England.

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Regulation (EU) 2025/1958 of the European Central Bank (ECB), amending Regulation (EU) 2015/534 on the reporting of supervisory financial information (the Financial Reporting Regulation) under the Single Supervisory Mechanism (SSM), has been published in the Official Journal of the European Union. Adopted on 9 September, the Regulation amends the Financial Reporting Regulation to allow the ECB to collect additional data from less significant credit institutions and branches with total assets of EUR3 billion or less. The additional information is considered necessary for the ECB to foster comparability of the outcomes of the supervisory review and evaluation process assessment. The Regulation enters into force on 6 November and will apply from 30 December.