The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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FCA consults on proposed prudential regime for cryptoasset firms
28 May 2025
The UK Financial Conduct Authority (FCA) has published consultation paper CP25/15 on its proposed prudential regime for cryptoasset firms, also accompanied by an updated webpage. This is intended to be read together with CP25/14 on stablecoin issuance and cryptoasset custody, which we discuss here. In this consultation paper, the FCA has proposed prudential rules and guidance for cryptoasset firms, including those issuing qualifying stablecoins and safeguarding qualifying cryptoassets, including stablecoins. The proposals introduce a new prudential regime to be integrated through two new sourcebooks: (i) COREPRU which will initially apply to firms carrying on regulated cryptoasset activities; and (ii) CRYPTOPRU, which will contain other sector-specific requirements for firms doing regulated cryptoasset activities, with these firms referred to as CRYPTOPRU firms.
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EGOV Study on EU banking sector and competitiveness
26 May 2025
The Economic Governance and EMU Scrutiny Unit has published a study on enhancing EU competitiveness in the banking sector, provided at the request of the European Parliament's Committee on Economic and Monetary Affairs. The study emphasises the importance of a resilient and efficient banking sector for EU competitiveness. Building on its analysis, the study has recommended that, to achieve this, the EU should first prioritise the defragmentation of the banking market, and second, simplify and streamline the prudential framework for banks without compromising resilience.
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EBA issues opinion on Norway's measure of risk weight floor increase
23 May 2025
The European Banking Authority (EBA) has issued an opinion (dated 12 May) in response to a notification from the Norwegian Ministry of Finance, regarding its intention to recalibrate the risk weight floor for Norwegian retail residential real estate exposures under Article 458 of Regulation (EU) No 575/2013 of the Capital Requirements Regulation. The opinion was published alongside a press release. The measure, initially introduced on 31 December 2020 and extended until 30 June, will result in the risk weight floor increase from 20% to 25% starting from 1 July and remaining in force until 31 December 2026. It applies to all institutions established in Norway that use the Internal Ratings Based approach to calculate capital requirements for relevant exposures, seeking to address systemic risks arising from high household debt and rising real estate prices. The EBA does support the measure but invites the Ministry of Finance to closely monitor and review it to ensure proportionality and avoid overlaps with other regulatory requirements and measures already in place.Topic : Prudential Regulation -
EBA onboarding plan for new Pillar 3 data hub
22 May 2025
The European Banking Authority (EBA) has published an onboarding plan, together with a press release, for large and other institutions to access and submit information to the new Pillar 3 Data Hub (P3DH)—a centralised platform for public disclosures under the revised Capital Requirements Regulation (CRR3). The onboarding plan includes procedural steps for institutions to follow when submitting Pillar 3 information and outlines a phased-in timeline for the process. The initiative will enable users to explore and visualise disclosures across institutions and over time, making it easier for institutions to benchmark themselves against peers and enhancing market discipline. The P3DH information will be available to the public from December. The EBA has also published a list of FAQs.Topic : Prudential Regulation -
PRA Phase 1 of Pillar 2A review
22 May 2025
The UK Prudential Regulation Authority (PRA) has published a consultation paper (CP12/25) setting out Phase 1 of its Pillar 2A review. This first phase review seeks to address the consequential impact of the near-final PRA rules that would implement the Basel 3.1 standards, as well as proposals to improve information, guidance and transparency for firms and options to reduce the reporting burden in the interests of proportionality.
Read more.Topic : Prudential Regulation -
EBA consults on draft ITS on Pillar 3 disclosure frameworks
22 May 2025
The European Banking Authority (EBA) has published a consultation paper (CP) proposing amendments to Commission Implementing Regulation (EU) 2024/3172 on the EBA Pillar 3 disclosure framework, aligning it with the requirements of revised Capital Requirements Regulation (CRR3) on ESG-related risks, equity exposures and aggregate exposure to shadow banking entities. The CP also seeks to finalise the implementation of prudential disclosure requirements included in the EU banking package published in 2024. Through the amendments, the EBA aims to improve the transparency and consistency of disclosures while also simplifying the reporting process for institutions. The EBA also intends to provide an updated mapping tool to help institutions align Pillar 3 disclosures with supervisory reporting requirements. The deadline for comments to the consultation paper is 22 August. The final ITS are expected to be submitted to the European Commission by Q4 2025. -
Basel Committee on Banking Supervision discusses key initiatives
21 May 2025
The Basel Committee on Banking Supervision (BCBS) had met to discuss a range of initiatives, following the GHOS meeting which took place earlier this month. The discussions focused on:- Recent market developments and the financial stability outlook for the global banking system.
- Progress on efforts to strengthen supervisory effectiveness following the 2023 banking turmoil. An update on the outcome of this work will be published by the end of the year.
- Comments received to the BCBS consultation on third-part risk management in the banking sector. The BCBS has aimed to finalise principles for third-party risk management by the end of 2025.
- The use of technological innovation to make Pillar 3 disclosures more accessible in machine-readable formats. The BCBS plans to consult on this proposal by the end of the year.
- Prioritising the analysis of financial risks from extreme weather events. The BCBS is also mandated to publish the voluntary climate-related financial risk disclosure framework, which will be released in June.
Topic : Prudential Regulation -
EC call for advice to EBA for second benchmarking of national loan enforcements frameworks
21 May 2025
The European Commission (EC) has published a call for advice to the European Banking Authority (EBA) together with a letter from John Berrigan, Directorate-General of Financial Stability, Financial Services and Capital Markets Union (DG FISMA). The EC has asked the EBA to conduct a second benchmarking exercise on national loan enforcement frameworks from a bank creditor perspective, following the initial exercise conducted in 2019–2020. The benchmarking will assess the efficiency of enforcement procedures in terms of recovery rates, time to recovery and judicial costs. The EBA is expected to deliver a preliminary analysis by July, with the final report due by 31 October.Topic : Prudential Regulation -
PRA policy statement on updates to SS5/21 for international firms and branch reporting
20 May 2025
The UK Prudential Regulation Authority (PRA) has published a final policy statement (PS6/25) alongside a press release, finalising the updates to Supervisory Statement 5/21 (SS 5/21) and branch reporting requirements for international firms operating in the UK. In response to feedback on its July 2024 consultation, the PRA has made several adjustments to the draft policy.
Read more.Topic : Prudential Regulation -
EBA 2024 annual report on Work Programme Achievements – Part 1
20 May 2025
The European Banking Authority (EBA) has published part 1 of its 2024 annual report, with a press release, reflecting on key regulatory and supervisory achievements under its work programme over the past year. These include: (i) progress in the implementation of the Basel III reforms; (ii) the further integration of ESG considerations into regulatory frameworks, via the issuance of guidelines and reports on ESG risks, greenwashing and scenario analysis; (iii) the assessment of financial stability amid high interest rates and geopolitical uncertainties, supported by two risk assessment reports; (iv) the enhancement of regulatory data infrastructure through the EUCLID platform; (v) the development of oversight and supervisory capacity for firms subject to the EU Digital Operational Resilience Act (DORA) and the EU Markets in Crypto-Assets Regulation (MiCAR); and (vi) an enhanced focus on innovation and consumers (including access to financial services) while preparing for the transition to the new anti-money laundering and counter-terrorist financing (AML/CFT) framework. -
EBA repeals guidelines on specification of high-risk exposures
16 May 2025
The European Banking Authority (EBA) has repealed its guidelines on the specification of types of exposures to be associated with high risk. The decision follows the application of the revised Capital Requirements Regulation (CRR 3) which no longer includes the high-risk exposure class and now only refers to subordinated debt exposures. As a result, the guidelines are no longer applicable.Topic : Prudential Regulation -
ECON draft report on access to finance for SMEs and scale-ups
14 May 2025
The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published a draft report (dated 13 May) and motion for a European Parliament resolution on improving access to finance for SMEs and scale-ups. The motion for a resolution has regard to various recent European Commission (EC) communications, including on the Savings and Investment Union (SIU) and competitiveness compass, and other key publications and reports such as the Draghi report and Letta report.
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EBA updated report on monitoring of LCR and NSFR
14 May 2025
The European Banking Authority (EBA) has published an updated report, together with a press release, on the monitoring of the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR) in the European Union. This report provides updated guidance following the March 2023 banking turmoil, which highlighted the need for enhanced supervision of liquidity aspects resulting from changes in interest rates and related trends in deposit behaviour and concentrations.
Read more.Topic : Prudential Regulation -
GHOS Meeting: Basel III implementation and climate-related financial risks
12 May 2025
The Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision (BIS), met to discuss the implementation of Basel III and its work on climate-related financial risks. The GHOS members unanimously reaffirmed their expectation to implement Basel III in full and consistently and as soon as possible, noting that approximately 70% of member jurisdictions have now implemented, or will shortly implement, the standards. The GHOS tasked the Committee with continuing to monitor and assess the full and consistent implementation of Basel III. GHOS members also discussed the Committee's proposed Pillar 3 disclosure framework for climate-related financial risks. The Basel Committee will publish a voluntary disclosure framework for jurisdictions to consider. In addition, the GHOS discussed the Committee's broader work on climate-related financial risks and tasked the Committee with prioritising its work to analyse the impact of extreme weather events on financial risks.Topic : Prudential Regulation -
EC adopts delegated regulation amending RTS for market risk under CRR
8 May 2025
The European Commission has adopted Delegated Regulation (EU) 2025/878 amending regulatory technical standards (RTS) on technical details of back-testing and profit and loss attribution requirements, the criteria for assessing the modellability of risk factors, and the treatment of foreign-exchange risk and commodity risk in the non-trading book. The amendments are being made to reflect amendments made to Regulation (EU) No 575/2013 (CRR) which introduced a number of remaining BCBS requirements which are yet to be implemented and some clarifications, including changes to ensure alignment with BCBS international standards. Key amendments include: (i) updated criteria for classifying trading desks and the removal of the aggregation formula for back-testing and profit and loss attribution requirements; (ii) adjusting documentation requirements to support competent authorities on whether institutions can use market data provided by third-party vendors in the assessment of modellability of risk factors; and (iii) clarifying the calculation of own funds requirements for market risk related to non-trading book positions. The regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.Topic : Prudential Regulation -
FCA findings from smaller asset managers and alternatives business model review
8 May 2025
The UK Financial Conduct Authority (FCA) has published findings of its review of smaller asset managers and alternatives business models, together with a press release. The review formed part of the FCA's alternatives supervisory strategy as outlined previously in 2022 in a portfolio letter. The FCA publication includes examples of good practice, to help new market entrants, smaller firms and growing organisations benchmark sound risk management practices and better understand regulatory expectations to manage risks and enhance consumer protection.
The FCA's findings focused on three topics where areas for improvement were identified:- High-risk investments (HRIs). Most firms offering HRIs were able to clearly categorise their products, while some firms did not have sufficient processes in place to ensure HRIs were only sold to clients if they are appropriate. The findings included specific commentary in relation to financial promotions, product, investor and client categorisation and investor assessments and controls.
Read more.Topic : Prudential Regulation -
PRA consults on withdrawal of SS20/15: Supervising building societies' treasury and lending activities
8 May 2025
The Prudential Regulatory Authority (PRA) has published a consultation paper (CP/11/25) proposing the deletion of supervisory statement (SS) 20/15, which outlines the supervision of building societies' treasury and lending activities. SS20/15 sets out the PRA's expectations for building societies to comply with the Building Societies Act 1986, the Financial Services and Markets Act 2000, the PRA Rulebook and SS24/15. The PRA conducted a review and concluded that SS20/15 is inconsistent with its broader policy approach and creates a level playing field issue by imposing prescriptive expectations on building societies that banks do not face. In addition, risk management in the building societies sector has advanced since SS20/15 with the PRA now having various tools to supervise firms. As a result, the PRA is proposing to withdraw SS20/15.
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Delegated regulation amending RTS on supervisory delta of call and commodity risk options published in the OJ
5 May 2025
Commission Delegated Regulation (EU) 2025/855 amending regulatory technical standards (RTS) laid down in Delegated Regulation (EU) 2021/931 as regards the specification of the formula for calculating the supervisory delta of call and put options mapped to the commodity risk category, was published in the Official Journal of the European Union (OJ). The RTS specify the formula for calculating the supervisory delta of call and put options mapped to the commodity risk category. This is based on the approach taken in the Basel Framework (CRE52) and for the purposes of Article 279a(3) of the EU Capital Requirements Regulation (CRR) in the standardised approach for counterparty credit risk. CRR III expanded the scope of Article 279a(3) to cover commodity risk, which required amendment to the RTS. The regulation will enter into force on the twentieth day following its publication in the OJ.Topic : Prudential Regulation -
EBA consults on amendments to RTS for risk weights on immovable property exposures
30 April 2025
The European Banking Authority (EBA) has issued a consultation paper on draft regulatory technical standards (RTS) amending Delegated Regulation (EU) 2023/206, supplementing 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 proposed amendments aim to align the RTS with the revised CRR (CRR3) framework. The deadline for comments on the consultation is 30 May. The final report on the RTS is due by 10 January 2026.Topic : Prudential Regulation -
BCBS updates principles for the management of credit risk
30 April 2025
The Basel Committee on Banking Supervision (BCBS) has published a revised version of its principles for the management of credit risk, which serve as guidelines for banking supervisory authorities to assess banks' credit risk management processes. The updated principles, published alongside a press release, reaffirm the guidelines first established in 2000 while making limited technical amendments to align with the current Basel Framework and recent Committee guidance. The principles focus on four key areas: (i) establishing a suitable credit risk environment; (ii) operating under a sound credit-granting process; (iii) maintaining an appropriate credit administration, measurement and monitoring process; and (iv) ensuring adequate controls over credit risk. The update to the guidelines follows a review mandated by BCBS in July 2023, confirming the ongoing relevance of the credit risk principles, and incorporates feedback from a consultation held earlier this year (for background, please see our update). The update is not intended to change the content of the principles or cover new topics.Topic : Prudential Regulation -
PRA consults on updated supervisory expectations to manage climate-related risks
30 April 2025
The Prudential Regulation Authority (PRA) has issued a consultation paper (CP10/25) and draft updates to the supervisory statement 3/19. The consultation aims to enhance supervisory expectations on the management of climate-related risks by banks and insurers due to the growing impact of climate change. This consultation was also announced in a speech given by David Bailey, Executive Director of Prudential Policy at the BoE, at the Climate Financial Risk Forum. The proposals cover: Governance. Enhancing existing governance expectations in SS3/9, clarifying the applications of these policies for climate-related risk and emphasising the board's responsibility to set and own the overall business risk appetite for climate. The proposals include new expectations to ensure alignment between a firm's strategy and meeting its own climate targets that have been adopted, and on setting the internal controls environment.
Read more.Topic : Prudential Regulation -
ECON draft report on safeguarding and promoting financial stability amid economic uncertainties
30 April 2025
The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published a draft report on safeguarding and promoting financial stability amid economic uncertainties. The draft report emphasises the importance of financial stability as a cornerstone of the EU's economic resilience, particularly in the face of geopolitical uncertainty, heightened market volatility and structural changes. It calls for a well-integrated Capital Markets Union (CMU) to enhance investment flows and economic resilience while balancing these benefits with adequate safeguards to mitigate potential risks. There are several macro-financial risks identified, including rising sovereign debt levels, exposure to external shocks and vulnerabilities in the non-bank financial intermediation (NBFI) sector. To address these concerns, it stresses the need for robust crisis preparedness mechanisms, enhanced financial supervision, effective coordination between macro-prudential supervisors, access to granular data and an ability to respond quickly to emerging risks. It also advocates stronger cooperation with international financial bodies to manage cross-border risks and ensure a coordinated response to financial instability. -
EBA releases ESG dashboard with key indicators on climate risk in the EU/EEA banking sector
25 April 2025
The European Banking Authority (EBA) has released an ESG dashboard, accompanied by a press release, establishing a comprehensive framework to improve the monitoring of climate-related risks within the EU/EEA banking sector. This tool provides centralised access to climate risk indicators and benchmarks, enhancing the assessment and oversight of both transition and physical climate-related risks based on data disclosed by banks through their Pillar 3 ESG disclosures in line with Commission Implementing Regulation (EU) 2021/637. The dashboard includes indicators related to: (i) climate-related transition risk, (ii) physical risk, (iii) exposures secured by immovable property collateral, and (iv) the alignment of EU and EEA banks with the EU Taxonomy. The EBA plans to regularly update and evolve the indicators over time and reflect ongoing revisions to the Pillar 3 disclosure templates in future updated versions.Topic : Prudential Regulation -
FCA consultation on definition of capital for FCA investment firms
24 April 2025
The UK Financial Conduct Authority (FCA) has published a consultation paper (CP25/10), along with a press release and an updated webpage, proposing to remove all references to the UK Capital Requirements Regulation (UK CRR) from the definition of regulatory capital, also known as 'own funds', that applies to FCA investment firms within MIFIDPRU 3. The aim is to reduce regulatory burden and enhance clarity, making the framework more accessible for investment firms and easier for them to apply the requirements. The proposals do not change the rules about how much capital firms must hold but focus on simplifying and consolidating the existing rules about what qualifies as regulatory capital. The changes would reduce the volume of legal text by 70% with clear application for investment firms. The FCA also outlines its plan to establish a more integrated approach to prudential regulation by simplifying the own funds rules and incorporating them into the FCA Handbook. This involves: (i) consolidating requirements into MIFIDPRU 3, (ii) removing provisions that are only relevant for banks, and (iii) making requirements clearer and more accessible. A draft of the instrument that would make the proposed changes to MIFIDPRU and the Glossary, the Definition of Capital for Investment Firms Instrument 2025, is set out in Appendix 1 to CP25/10. The deadline for comments is 12 June, with final rules expected to be published in H2 2025 and the new framework expected to come into force on 1 January 2026.Topic : Prudential Regulation -
EC adopts Delegated Regulation on RTS for supervisory colleges
23 April 2025
The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Directive IV (CRD IV), containing regulatory technical standards (RTS) specifying the general conditions for the functioning of supervisory colleges, and repealing Commission Delegated Regulation (EU) 2016/98. Article 116 of CRD IV sets out provisions requiring consolidating supervisors to establish colleges of supervisors to facilitate certain supervisory tasks and to ensure appropriate coordination and cooperation with relevant third-country supervisory authorities. In addition, the competent authorities supervising an institution with significant branches in other Member States are, pursuant to Article 51(3) of CRD IV required to establish and chair colleges of supervisors where Article 116 is not applicable. Article 51(4) of the CRD IV empowers the Commission to adopt delegated acts specifying the general conditions for the functioning of colleges of supervisors. This Delegated Regulation repeals and replaces Delegated Regulation 2016/98 to account for amendments to CRD IV (e.g., in relation to the authorisation of certain financial holding companies and mixed financial holding companies, the establishment of intermediate EU parent undertakings, and removal of investment firms from the scope of CRD IV). It also includes new articles on the exchange of information with the observers of the supervisory college, specifically with resolution colleges and anti-money laundering (AML) and counter-terrorism financing (CFT) colleges, to enhance cooperation and information exchange with these authorities. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. The Delegated Regulation enters into force on the twentieth day following its publication in the Official Journal of the European Union.Topic : Prudential Regulation -
EC adopts Delegated Regulation on RTS on extraordinary circumstances under CRR
23 April 2025
The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Regulation (No 575/2013) (CRR), containing regulatory technical standards (RTS) of the conditions and indicators that the European Banking Authority (EBA) is to use when determining extraordinary circumstances under Articles 325az(5) and 325bf(6) of the CRR have occurred. In accordance with Articles 325bf(6) and 325az(5) of the CRR, as amended by CRR 3 (Regulation EU) 2024/1623), competent authorities may permit institutions to derogate from certain requirements of the regulatory framework for the use of internal models, or apply a softer version of those requirements, where, in the opinion of the EBA, a situation of extraordinary circumstances has occurred. In accordance with Article 325az(9) of the CRR, the occurrence of extraordinary circumstances shall be determined by the EBA, which must issue an opinion to that effect. The Delegated Regulation contains RTS which set out a framework for the EBA to follow when identifying a situation of extraordinary circumstances. The RTS specify that such circumstances could be recognised where there is a situation of significant cross-border financial market stress, or a major regime shift associated with a similar level of stress (e.g., a liquidity crisis), that can render the outcome of the back-testing and profit and loss attribution requirements inappropriate. The RTS also contain a non-exhaustive list of indicators that the EBA is to use to assess whether a situation of extraordinary circumstances has occurred. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union.Topic : Prudential Regulation -
PRA policy statement on identification and management of step-in risk
22 April 2025
The UK Prudential Regulation Authority (PRA) has published a policy statement on the identification and management of step-in risk (PS5/25). The policy statement provides feedback on responses to consultation paper (CP) 23/23 which, among other things, proposed to: (i) introduce new rules where firms are required to develop their own step-in risk policies and procedures based on the relevant Basel Committee on Banking Supervision's (BCBS) guidelines; and (ii) introduce an accompanying supervisory statement also based on the BCBS guidelines, detailing factors that firms are expected to consider when identifying potential step-in risk and in deciding, where necessary, on potential mitigating action.
Read more.Topic : Prudential Regulation -
BoE publishes two new stress test scenarios for 2025 Bank Capital Stress Test
17 April 2025
The Bank of England (BoE) has updated its stress testing webpage, announcing it has published two stress test scenarios for use by banks and building societies that are not participants in its concurrent stress testing exercise. These scenarios have been drawn from the 2025 Bank Capital Stress Test scenario published on 24 March to support concurrent stress testing of the largest UK banks and building societies. The scenarios serve as a template and severity benchmark for firms to support their own internal capital adequacy assessment process (ICAAP) stress testing scenario design processes. The intention behind publishing two different scenarios is to encourage firms to evaluate the type, characteristics and severity of stress their business model may be vulnerable to when designing their own stress testing scenarios. The BoE refers firms to the Supervisory Statement on the ICAAP and the supervisory review and evaluation process (SREP) for guidance on the role of stress testing within the framework for setting banks' and building societies' capital requirements. The BoE explains that firms should use the scenarios as a starting point to build and accurately calibrate their own scenarios under Pillar 2, noting that any single scenario designed for firms with diverse business models and risks has its limitations. Therefore, it expects firms to select scenarios that robustly challenge their business and, ultimately, be responsible for creating their own scenarios to test resilience.Topic : Prudential Regulation -
PRA announces withdrawal of the modification by consent for third country covered bonds in LCR
17 April 2025
The UK Prudential Regulation Authority (PRA) has announced it is withdrawing the modification by consent (MbC) for third country covered bonds in the Liquidity Coverage Ratio (LCR) part of the PRA Rulebook, which it had previously offered on 8 April. The decision to pause the process and withdraw the MbC is due to the PRA receiving several technical comments and requests for clarification, which the PRA seeks to consider and address appropriately. Once the process is complete, the PRA will clarify its approach. The MbC was intended to modify Article 11 (1)(d)(ii) of the LCR part of the PRA Rulebook, to allow firms the inclusion of certain third country covered bonds in their Level 2A high-quality liquid assets (HQLA) up to a maximum value, determined at 31 January 2025 (the reporting date). During the pause in the process, firms do not need to amend their approach to recognising third country covered bonds under the Liquidity Coverage Ratio (CRR) and Liquidity (CRR) Parts of the PRA Rulebook.Topic : Prudential Regulation -
UK 2025 Regulatory Initiatives Grid published
14 April 2025
The Financial Services Regulatory Initiatives Forum (the Forum) has published the Regulatory Initiatives Forum Grid (the Grid), with the UK Financial Conduct Authority (FCA) also updating its webpage. The previous Grid was due to be published in May 2024 but was postponed due to the General Election, meaning the Forum published only an interim update in October 2024.
The 2025 Grid sets out the regulatory pipeline for the next 24 months and reflects the reprioritisation that has taken place since the new government came into power. Notable initiatives include:- motor finance commission review: the FCA intends to confirm, within six weeks of the Supreme Court's decision on past use of discretionary commission arrangements by motor finance firms, whether it will propose a redress scheme;
- liquidity risk management in funds: the FCA will consult on refined proposals regarding liquidity risk management in funds to implement FSB and IOSCO guidelines;
- Consumer Composite Investments (CCI) Regulation: the FCA published a second consultation paper on the new CCI regime on 16 April (see our update) and plans to issue a Policy Statement with final rules in late 2025;
Topics : Client Asset Protection, Conduct and Culture, Consumer / Retail, Financial Crime and Sanctions, Financial Market Infrastructure, FinTech, Fund Regulation, MiFID II, Operational Resilience, Other Developments, Payment Services and Payment Systems, Prudential Regulation, Recovery and Resolution, Securities -
UK PRA business plan 2025/26
10 April 2025
The Prudential Regulation Authority (PRA) has published its Business Plan 2025/26 which sets out the workplan for and regulatory initiatives to advance its strategic priorities. This year's business plan is said to reflect the evolution of the PRA's priorities, and in particular the work it is doing to deliver its new secondary objective on competitiveness and growth. Specific initiatives include:- Implementing the Basel 3.1 standards, where the PRA intends to publish its final rules, once Parliament has revoked the relevant parts of the Capital Requirements Regulation (CRR).
- Finalising and implementing the strong and simple framework for small domestic deposit takers. During 2025/26, the PRA will finalise the simplified capital regime and the additional liquidity simplifications. It intends to publish a policy statement on these in Q4.
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PRA Dear CFO letter: prudential expectations on significant risk transfer financing
9 April 2025
The Prudential Regulation Authority (PRA) has published a Dear CFO letter outlining its prudential expectations regarding practices related to illiquid and structured financing portfolios. The PRA focuses on significant risk transfer (SRT) financing activities, but holds a wider expectation that firms should consider its expectations for all relevant financing portfolios. The PRA emphasises the expectation that firms analyse the characteristics of different collateral types when determining the appropriate regulatory capital treatment. The PRA is concerned that not all firms conduct sufficiently through assessments of collateral eligibility and that some firms have adopted imprudent approaches to the recognition of collateral for regulatory capital purposes, leading to an undercapitalisation of risks. The PRA highlights that its expectations align with the near-final rule changes for implementation of the Basel 3.1 Standards.
The PRA expects firms to consider the concerns identified in the letter and ensure, where needed, that policies, control frameworks and reporting are enhanced to address them. Supervisors will be requesting relevant firms to provide a response to the letter by 11 June.Topic : Prudential Regulation -
EBA 2024 reports: Market and credit risk benchmarking exercises
4 April 2025
The European Banking Authority (EBA) has published its 2024 Reports on the annual market and credit risk benchmarking exercises. Both reports are mandated by Article 78 of the Capital Requirements Directive to assist competent authorities at monitoring the consistency of risk weighted assets (RWAs) across all EU institutions authorised to use internal approaches for the calculation of capital requirements. Regarding market risk, the report summarises the conclusions drawn from a hypothetical portfolio exercise conducted in 2023/24, performed on a sample of 43 European banks from 13 jurisdictions. The results confirm that most participating banks in the exercise have seen a relatively low dispersion in the initial market valuation, though slightly higher compared to 2023. However, there was a decrease in the dispersion of risk measures submissions compared to the previous exercise, as well as variability in general through most exercises, owing to better data submissions by participating banks because of improved instructions, knowledge of the portfolio and the resolution of issues encountered in the previous exercise. The EBA has also released, for the first time, a specific report on the fundamental review of the trading book Alternative Standardised Approach (ASA). This report expands the findings of the market risk report. In the future, benchmarking exercises will be extended to banks that apply the ASA methodology independently of the current requirement to obtain approval to adopt internal models for market risk own funds requirements. For credit risk, the results confirmed that the variability of RWAs remained stable compared to the previous year, but for some asset classes and parameters, a reduction could be observed in the longer run.Topic : Prudential Regulation -
UK BoE consults on FSCS depositor protection and new resolution tool
31 March 2025
The UK Bank of England (BoE) has published its consultation paper CP4/25 which contains proposals for depositor protection and the new resolution tool proposed by the Bank Resolution (Recapitalisation) Bill. The consultation paper was published alongside relevant appendices and a press release.
The first part of the consultation proposes increasing the FSCS deposit protection limit from £85,000 to £110,000, and increasing the limit applicable to temporary high balance claims from GBP1 million to GBP1.4 million. The increases take into account the effect of consumer price inflation since the limit was last updated in 2017, with the UK Prudential Regulation Authority (PRA) revising the figure to a round number for memorability, with the aim of increasing depositor awareness and confidence in the deposit protection framework. The consultation also proposes changes to the PRA's supervisory expectation, reinstating that firms should ensure their systems are able to accommodate limit changes at short notice.
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EC adopts proposal to amend CRR in relation to SFT stable funding factors
31 March 2025
The European Commission (EC) has adopted a proposal to amend Regulation (EU) No 575/2013 (CRR) in relation to the stable funding factors for securities financing transactions (SFTs) and unsecured transactions with a residual maturity of less than six months. The factors are used to apply the net stable funding requirements (NSFR) under the CRR, and, by virtue of article 510(8) of CRR, were due to be increased unless otherwise specified in a legislative act adopted on the basis of an EC proposal. The original intention of article 510(8) was to increase the factors in line with the international standards agreed by the Basel Committee on Banking Supervision, but allowing for credit institutions to adapt in time, and calibrate appropriately, for the increase, which would have occurred by 28 June. However, the current position is instead being maintained in order to ensure the ongoing efficient functioning of SFT and collateral markets, and avoid an undue increase in funding costs for credit institutions. The decision to maintain the current position also intends to bolster the EU's competitive position given the decisions made by other jurisdictions (including the UK and the U.S.) to deviate from the Basel III international standards. The EC has also published, alongside the proposal document, a staff working document providing background, and a press release giving an overview of the proposal and its context.Topic : Prudential Regulation -
UK FPC consults on increase to O-SII buffer thresholds
28 March 2025
The UK Financial Policy Committee (FPC) has published its consultation paper on increasing the current capital buffer thresholds which apply to other systemically important institutions (O-SIIs). The thresholds are part of the FPC's framework for the systemic risk buffer, which requires systemically important banks to hold more capital to absorb stress, and increase the resilience of the UK financial system as a whole. The consultation follows the FPC's review in 2024 which noted the growth in nominal GDP between 2019 and 2023, and that current capital buffer thresholds would need to change to reflect this cumulative growth. Accordingly, the FPC is proposing to increase the current O-SII buffer thresholds by 20% (rounded to the nearest GBP5 million), based on the 20% cumulative growth in nominal GDP between 2019 and 2023. If the FPC confirms these proposals, the UK Prudential Regulation Authority (PRA), which is responsible for issuing O-SII buffer rates, will reissue 2024 O-SII buffer rates based on firms' 2023 leverage exposure measures which will apply from 1 January 2026. The FPC also proposes to assess the thresholds as part of its regular reviews of the framework which take place at least every three years, to avoid significant one-off increases in future. Going forward, it is proposed that future indexation will be communicated through the FPC Record which will then be used by the PRA for setting the new rate. The deadline for comments is 30 May.Topic : Prudential Regulation -
Bank of England 2025 bank capital stress test launched
24 March 2025
The Bank of England (BoE) has launched the 2025 bank capital stress test for the seven largest and most systemic UK banks and building societies. The exercise is the successor to the Annual Cyclical Scenario. The test involves a hypothetical stress scenario which will be used to assess the resilience of the UK banking system to deep simultaneous recessions in the UK and global economies, large falls in asset prices, higher global interest rates and a stressed level of misconduct costs. The stress scenario is not a forecast of macroeconomic and financial conditions. Rather, like previous concurrent stress test scenarios, it is intended to be a coherent "tail risk" scenario designed to be severe and broad enough to allow the Financial Policy Committee and Prudential Regulation Committee to assess the resilience of UK banks to a range of adverse shocks. The 2025 Bank Capital Stress Test has three elements, which include a macroeconomic scenario, a financial markets and traded risk scenario and a misconduct stress. The macroeconomic scenario involves a severe global aggregate supply shock leading to deep recessions in the UK and globally. The BoE also published key elements of the stress test. The results will be published at an aggregate and individual bank level in Q4. The results will be used to inform the setting of capital buffers for the UK banking system and individual participating banks, and to inform a broader understanding of risks in the banking system.Topic : Prudential Regulation -
European Commission targeted consultation on the application of the markets risk prudential framework
24 March 2025
The European Commission (EC) has launched a consultation to help determine the best approach for the application of the EU's framework on market risk prudential requirements for banks, with an accompanying press release. Last year, the Commission postponed by one year (until 1 January 2026) the date of fundamental review of the trading book (FRTB) application in the EU, in order to align implementation with other major global jurisdictions. Recent international developments indicate further possible delays in these jurisdictions, raising concerns on the international level playing field and the impact on EU banks. In this context, the EC is consulting on possible action within its mandate under Article 461a of the capital requirements regulation around three potential options: (i) implementing the FRTB as currently laid down in the Banking package, from 1 January 2026; (ii) postponing the date of application by a further year (1 January 2027); or (iii) introducing temporary and targeted amendments to the market risk framework for up to three years. A list of possible temporary amendments is set out in the annex to the consultation. Combinations of the options or other alternatives could also be envisaged provided they are within the EC's mandate. Interested parties are invited to submit their contributions by 22 April. The EC is empowered under Article 461a to adopt a Delegated Regulation by the end of June.Topic : Prudential Regulation -
UK PRA consultation on recognised exchange policy and transfer of main indices
19 March 2025
The Prudential Regulation Authority (PRA) has launched a consultation on the proposed conditions an investment exchange must meet to be a 'recognised exchange' for the purposes of Article 4(1)(72)(c) of the UK's Capital Requirements Regulation (CRR). The PRA proposes to introduce a new Recognised Exchanges (RE) Part to specify the conditions which focus on two areas: (i) exchange and market structure risk; and (ii) asset liquidity risk.
The PRA proposes that firms should undertake the exchange and asset liquidity risk assessment themselves but to mitigate the risk that firms adopt inconsistent approaches, the PRA proposes to evaluate the implemented approaches through post implementation thematic reviews. Consequential amendments are proposed to the definition of higher risk equity exposure in the PRA's near-final rules implementing Basel 3.1, tying into the criteria for equity risk weight exposures the exchange and market structure risk but not the asset liquidity risk conditions. The PRA also proposes to restate the list of 'main indices' (those securities that are traded on a stock exchange, which are treated as eligible for recognition as Credit Risk Mitigation) in the Glossary Part of the PRA Rulebook without any policy changes. The list is currently in Commission Implementing Regulation 2016/1646. The deadline for comments on the consultation is 18 June.
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EBA final report on amendments to ITS on internal model authorisations under CRR
17 March 2025
The European Banking Authority has published its final draft implementing technical standards (ITS) amending the existing implementing regulation on the joint decision process for internal model authorisation under Articles 143(1), 151(9), 283 and 325az of the Capital Requirements Regulation (CRR). This final draft amending ITS is part of the first phase of the EBA roadmap for implementing the EU Banking Package. The key amendments include:- A revised scope for the use of internal models for regulatory purposes under CRR III, where the possibility of applying these models for operational risk has been removed. As a result, references to the Advanced Measurement Approach (AMA) have been deleted from the scope of the revised ITS.
- Updated references to the ITS and regulatory technical standards (RTS) on the functioning of supervisory colleges, reflecting changes in the revised supervisory colleges regulatory framework.
The draft ITS will be submitted to the Commission for endorsement following which the ITS will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the EU.Topic : Prudential Regulation -
BCBS provides an update on upcoming workstreams
13 March 2025
The Basel Committee on Banking Supervision (BCBS) has published a press release providing an update on its workstreams. The BCBS states that it will publish by mid-2025 an update on the outcome of its work to prepare a suite of practical tools to support supervisors in their day-to-day work, taking into account the lessons learned from the 2023 banking turmoil. The BCBS has also committed to analysing recent developments and global practices on banks' information and communication technology risk management. The Committee plans to publish a range of practices report covering its findings in 2026. As part of the BCBS's work relating to non-bank financial intermediaries (NBFIs), the BCBS states that it will conduct a comprehensive investigation into the synthetic risk transfers from banks to NBFIs to provide an enhanced understanding of the risks and benefits of these products and the evolving nature of the transaction structures.Topic : Prudential Regulation -
EU amending technical standards published for specifying the data collection for the 2025 benchmarking exercise
12 March 2025
The Commission Implementing Regulation (EU) 2025/379 has been published in the Official Journal of the European Union. The EU Capital Requirements Directive requires competent authorities to conduct an annual assessment of the quality of internal approaches used for the calculation of own funds requirements. To assist competent authorities in this assessment, the European Banking Authority calculates and distributes benchmark values to competent authorities that allows a comparison of individual institutions' risk parameters. These benchmark values are based on data submitted by institutions as laid out in Commission Implementing Regulation (EU) 2016/2070 which specifies the benchmarking portfolios, templates, and definitions to be used as part of the annual benchmarking exercises. Commission Implementing Regulation (EU) 2025/379 amends the implementing technical standards set out in Implementing Regulation (EU) 2016/2070, replacing the existing annexes IV, V, VI, VII, and X. It will enter into force on 1 April.Topic : Prudential Regulation -
UK PRA consults on increasing threshold for leverage ratio framework
5 March 2025
The Prudential Regulation Authority (PRA) has opened a consultation on raising the retail deposits leverage ratio threshold from £50 billion to £70 billion. The leverage ratio applies to major UK banks, building societies and investment firms and to those firms with significant non-UK assets. The PRA sets thresholds to determine which firms are subject to the leverage ratio. The thresholds are £50 billion in retail deposits for major UK firms and £10 billion for non-UK assets for firms with significant non-UK assets. The PRA is proposing to increase the threshold for major UK firms, which was first implemented in 2016, to £70 billion to maintain the proportionality of the framework, ensure it reflects the risk appetite and does not lead to inadvertent regulatory tightening. The threshold for significant non-UK assets will remain the same as the PRA considers that it is still appropriate. Responses to the consultation may be submitted until 5 June. The PRA proposes that the implementation date for these changes would be 1 January 2026.Topic : Prudential Regulation -
FCA speech on approach to NBFI leverage
26 February 2025
The UK Financial Conduct Authority (FCA) has published a speech by Sarah Pritchard, executive director of consumers, competition and international, on the FCA's approach to non-bank financial intermediation (NBFI) leverage. The FCA believes that the first line of defence against the build-up of systemic risk related to leverage use is NBFIs themselves appropriately managing their own investment risk. However, for NBFIs to effectively manage their risks related to leverage use, they need to have access to adequate data and information about the markets in which they operate and the risks to which they're exposed. The second line of defence is counterparty credit risk management. However, in recent stress episodes, counterparty credit risk management has often failed to prevent systemic risks from crystallising. Enhancing private disclosure between counterparties would give leverage providers more information about the overall risk exposures of their NBFI clients, allowing them to manage their counterparty risk more effectively. That said, if NBFIs are required to disclose too much information, this could reveal proprietary information about their investment strategies. The FCA consider that industry has an important role to play in establishing best practice and in developing solutions that can balance the interests of leverage users and providers to improve data availability, so that NBFIs and counterparty credit providers can continue to operate as the first and second lines of defence.
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EBA consultation on amending data collection for 2026 benchmarking under CRD IV
25 February 2025
The European Banking Authority (EBA) has published a consultation paper containing draft implementing technical standards (ITS) on amending Commission Implementing Regulation (EU) 2016/2070 with regard to the benchmarking of internal models in advance of the 2026 benchmarking exercise. Article 78 of Directive 2013/36 (CRD VI) requires competent authorities to conduct an annual assessment of the quality of approaches used for the calculation of own funds requirements. To assist competent authorities in this assessment, the EBA calculates and distributes benchmark values to competent authorities that allows a comparison of individual institutions' risk parameters. These benchmark values are based on data submitted by institutions as laid out in Commission Implementing Regulation (EU) 2016/2070 which specifies the benchmarking portfolios, templates and definitions to be used as part of the annual benchmarking exercises.
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FSB letter to G20 finance ministers and central bank governors ahead of meeting
24 February 2025
The Financial Stability Board (FSB) has published a letter (dated 21 February) to the G20 finance ministers and central bank governors ahead of their meeting on 26 and 27 February. The letter addresses areas of focus for the FSB, including:- Implementation monitoring, providing a strategic review of the FSB's monitoring of 15 years of implementation of reforms. The review is intended to provide valuable insights into the effectiveness of the monitoring of post-global financial crisis regulatory reforms and identify areas where improvements can be made in the tools used to ensure consistent, global implementation of agreed reforms. The FSB will publish a progress report in October.
- Completing the G20 roadmap to enhance cross-border payments. The FSB note that as the work has advanced, many structural issues have become apparent that require concerted efforts to resolve. Addressing these issues calls for significant additional work up to and beyond 2027. The FSB will report in October on progress towards the G20's goal of making cross-border payments faster, cheaper, more transparent, and accessible. The FSB's focus this year is on improving the end-user experience, coordinating closely the work of the Bank for International Settlements Committee on Payments and Market Infrastructures and other partner organisations.
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EBA report on data availability and feasibility of a common methodology for ESG exposures
24 February 2025
The European Banking Authority (EBA) has published a report on the data availability and feasibility of a common methodology for ESG exposures. In accordance with the mandate under Article 501c(1) of Regulation 575/2013 (CRR), this report aims to assess the availability and accessibility of data related to environmental, social and governance (ESG) risks, as well as the feasibility of introducing a standardised methodology for identifying and qualifying banking book credit exposures to ESG risks.
The EBA explores institutions' existing practices and identifies the current challenges in standardising the identification and classification of exposures to ESG risks, building on observations related to data quality and collection, assessment methodologies and available regulatory guidance. The overview of current practices is complemented by an analysis of specific elements covered by the mandate, including sustainability disclosure reporting frameworks, supervisory stress testing and ESG scores in the credit risk ratings of external credit assessment institutions.
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UK PRA approach to policy updated
20 February 2025
The UK Prudential Regulation Authority (PRA) has published its updated approach to policy under the regulatory framework as set out in UK Financial Services and Markets Act 2000. The approach document has been amended following the consultation (CP27/23) and is published with the PRA's policy statement which provides feedback to the consultation responses. The CP had, in particular, asked for feedback on the PRA's secondary competitiveness and growth objective, the implementation of international standards, and stakeholder engagement, in the context of the PRA's enhanced objective and accountability requirements introduced by FSMA 2023.
With regard to the secondary competitiveness and growth objective, the PRA reiterates a number of the points raised by the Independent Evaluation Office during its evaluation of the PRA's approach to its new objective, including the PRA's clarification that the most appropriate way to advance the secondary competitiveness and growth objective is to take forward a wide range of initiatives across its general functions, rather than via a single flagship initiative.
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UK FCA update on personal investment firms and capital deduction for redress
14 February 2025
The UK Financial Conduct Authority (FCA) has updated its webpage on its consultation paper CP23/24: capital deduction for redress: personal investment firms. The consultation was issued in response to the FCA identifying significant redress liabilities falling to the Financial Services Compensation Scheme, in order to strengthen prudential requirements so that personal investment firms have to hold more capital for redress. The consultation is now closed, and the FCA has updated its webpage to confirm that it is considering feedback. However, the updated webpage also confirms that the FCA is looking across at feedback linked to other proposals including the call for input on modernising the redress framework, and its review of regulatory requirements following the introduction of the Consumer Duty. The FCA also confirms that it will continue to carry out increased monitoring of firms as part of its authorisation process, and highlights the update it published in January which sets out FCA expectations on redress liabilities, and what firms should and should not do to tackle polluting behaviour and meet their redress liabilities.Topic : Prudential Regulation -
UK Prudential Regulation Authority policy statement on simplifying firm-specific capital communications
12 February 2025
The Prudential Regulation Authority (PRA) published a policy statement (PS2/25) on streamlining firm-specific capital communications which simplifies the content and process of the firm-specific capital communications used to set Pillar 2A, the systemic buffers and the additional leverage ratio buffer (ALRB). These changes have no impact on firms' capital requirements. The PRA also provides feedback to responses received to Chapter 3: Streamlining firm-specific capital communications of its September 2024 consultation on streamlining the Pillar 2A framework (CP9/24). In response to the feedback, the PRA has made one small change to paragraph 5.18 of supervisory statement SS31/15 on the internal capital adequacy assessment process (ICAAP) and the supervisory review and evaluation process (SREP). This change has no meaningful effect on the policy. The new policy and rules will take effect on 31 March. This is consistent with the consultation, and firms are not required to take any specific actions to implement the changes.Topic : Prudential Regulation