Regulatory Updates Newsletter: March 2026

Welcome to the March 2026 edition of our Regulatory Newsletter. 

This month had quite a few important announcements as regulators worldwide continued to strengthen financial stability and push forward on technology governance. The US came out with the Basel III end-game consultation, the PRA in the UK proposed major reforms to banks’ liquidity stress testing and the BoE eased resolution reporting burdens for smaller banks. Across Asia, Hong Kong regulators expanded a cross-sector AI sandbox initiative. In Europe, the EBA issued final guidance on capital backing for foreign bank branches, and EIOPA launched a consultation to streamline insurance-sector data collection. 

Dive in for official updates and actionable insights from leading jurisdictions across the globe.

US Basel III Endgame Consultation

Source: FED Press Release

On 19 March, the FED, FDIC, and OCC jointly issued proposals to streamline and update U.S. bank capital rules.

The three proposals target (1) the largest internationally active banks, (2) smaller banks, and (3) the measurement of systemic risk by the Fed. 

For large banks, the proposal would merge overlapping capital calculations into a single standardized approach, enhancing risk sensitivity and finalising Basel III reforms. For smaller banks, a simpler framework is proposed: capital requirements would better match traditional lending risks and reduce disincentives for mortgage lending (e.g. easing mortgage servicing capital). 

The Fed’s own proposal revises the surcharge for global systemically important banks to ensure it captures evolving risks. Collectively, the agencies estimate these changes would modestly lower overall capital needs (since modern, granular models can show lower risk than the older framework), while keeping capital well above pre-2008 levels. 

Comments on the proposals are due by 18 June 2026.

Implications

U.S. banks should assess how the new rules change capital calculations and planning. Large banks will need to prepare for a unified risk-weight framework (potentially reducing duplicative buffers), while smaller banks may see relief on mortgage and small business loans. Compliance teams must update capital models and systems once final rules emerge. 

The open comment process means institutions and stakeholders can influence the details through mid-June. Overall, the framework aims to make capital requirements more risk-aligned and efficient without eroding banking safety.

EBA Streamlines Supervisory Approvals for IRB Model Changes

Source- EBA

The European Banking Authority (EBA) published revised Regulatory Technical Standards (RTS) aimed at simplifying supervisory approvals for Internal Ratings Based (IRB) model changes. The amendments recalibrate the criteria used to classify model changes as “material”, significantly reducing the number of changes requiring prior supervisory approval.

The updated framework places greater reliance on quantitative thresholds, allowing routine model updates to proceed via notification rather than approval, unless they exceed defined limits. Qualitative triggers are now limited to more fundamental changes, such as model redevelopments, re-estimations of risk parameters, or significant revisions to default definitions.

In parallel, the RTS align with the Capital Requirements Regulation III (CRR3), removing outdated elements such as the IRB approach for equity exposures and the Advanced Measurement Approach (AMA). The changes are also coordinated with ongoing efforts by the European Central Bank (ECB) to streamline its own approval processes.

Implications

EU banks using IRB models should expect faster approval timelines and reduced administrative burden for model updates. Risk and model validation teams will need to reassess internal classification frameworks to align with the revised materiality thresholds.

The shift toward a more risk-based and threshold-driven approach enables firms to implement model improvements more quickly, addressing supervisory findings without prolonged delays. Overall, the changes improve efficiency while maintaining appropriate regulatory oversight of internal models.

UK PRA Proposes Liquidity Reform to Boost Stress Resilience

Source: BOE News Release 

The UK’s Prudential Regulation Authority (PRA) published a consultation paper to modernise liquidity standards and ensure banks can convert assets to cash quickly during a crisis. The proposals respond to recent failures (e.g. Silicon Valley Bank) and call for firms to conduct shorter-term stress tests. 

Key measures include requiring banks to-

(i) assess and internal-test liquidity over a one-week horizon (in addition to the existing 30-day horizon); 

(ii) remove a previous exemption for high-quality sovereign debt in those tests, ensuring all assets are stress-tested; and 

(iii) be operationally ready to access central bank liquidity if needed. Importantly, the PRA does not raise minimum liquidity buffers- instead the focus is on readiness and faster availability of existing liquid assets. 

Deputy Governor Sam Woods emphasized that “those assets do what they say on the tin” and are truly usable in a run.

Implications

Banks should prepare to run new internal 1-week liquidity drills and identify any barriers to selling assets under stress. Risk teams must review liquidity policies and systems to ensure rapid asset monetisation (e.g. reducing operational or legal delays). 

While overall liquid resources are unchanged, firms will need to justify to supervisors that their “Level 1” assets (like government bonds) are indeed available in extreme scenarios. In short, banks must demonstrate stronger preparedness to tap liquidity lines quickly when market funding dries up.

UK BoE Finalises Streamlining of Resolution Reporting

Source: BOE News Release

The Bank of England and PRA announced a package of simplifications to the UK bank failure (resolution) regime. 

The key change is a higher threshold for reporting: only banks with more than £100bn in retail deposits (up from £50bn) will be subject to detailed Resolution Assessment Framework (RAF) submissions. Smaller “deposit takers” can now review their recovery plans biennially instead of annually. 

The PRA also streamlined MREL (loss-absorbing liabilities) reporting by revising templates to cut redundant data. In addition, Pillar 3 disclosure rules were updated to make information on resolvability clearer (for example, how much capital is ring-fenced for resolution). Dave Ramsden (Deputy Governor, BoE) noted that these changes “reflect the reduced risks that smaller and less complex firms pose” while ensuring big banks remain safely resolvable.

Implications

Fewer banks will face the full resolution-planning burden, reducing compliance costs for mid-size lenders. Institutions near the old £50bn threshold should confirm whether they still exceed £100bn; systems may need tweaking to stop RAF reporting from April 2026.

All firms in scope must incorporate the new MREL templates and disclosure formats from early 2027. 

Overall, the streamlined regime reduces red tape without diluting the UK’s ability to resolve a failed bank, enabling quicker failure planning and more proportionate oversight.

SEC and CFTC Sign Cross-Market Harmonization MOU

Source: SEC Press Release

The SEC and CFTC announced a new Memorandum of Understanding (MOU) to coordinate their oversight. The historic MOU pledges to harmonize key areas of securities and derivatives regulation, reducing overlaps and regulatory frictions. 

In practice, the SEC Chairman and CFTC Chairman said they will align definitions and rules where possible, and jointly tackle issues like crypto, clearing, and cross-market surveillance. A “Joint Harmonization Initiative” was launched to pursue concrete steps (for example, co-developing clearing and margin standards, harmonising swap data reporting, and coordinating oversight of dually-registered firms). The aim is to support innovation and competitiveness by giving market participants a clearer, unified regulatory framework.

Implications

Financial firms operating in both securities and futures markets should expect increasing collaboration between regulators. In practice, this could lead to streamlined application processes and fewer conflicting requirements when dealing with both agencies. 

Crypto and fintech firms, in particular, may see more unified guidance as the SEC and CFTC work together. The initiative is voluntary, but signals that major U.S. regulators prefer coordination to enforcement clashes, potentially reducing legal uncertainty for market participants.

Hong Kong Launches Generative AI Sandbox++ Across Finance

Source: HKMA Press Release

The HKMA together with the SFC, Insurance Authority and MPFA unveiled “GenA.I. Sandbox++”, an expanded cross-sector sandbox for generative AI in finance. 

Building on a 2024 pilot, the new Sandbox++ invites banks, insurers, fund managers, pension schemes and payment firms to develop AI use cases in a supervised environment. 

The initiative focuses on three themes- risk management, anti-fraud, and customer experience- while also applying AI tools to test AI itself (“AI vs. AI” strategies). Participating firms gain access to dedicated GPU computing resources and regulatory guidance as they pilot projects like AI-driven underwriting, fraud detection, and smart customer chatbots. 

HKMA Chief Eddie Yue said the sandbox aims to “accelerate responsible AI adoption” and foster collaboration between tech firms and regulators in Hong Kong’s finance sector.

Implications

The Sandbox++ presents an opportunity for Hong Kong financial institutions to innovate rapidly with AI under regulatory oversight. 

Firms should watch for invitations to participate and begin preparing use-case proposals in the high-impact areas defined. The approach provides a template for how regulators can balance innovation with safety: technology pilots combined with active supervision. Other jurisdictions may look to Hong Kong’s model as an example of pro-innovation regulation.

EBA Finalises Capital Endowment Guidelines for Foreign Branches

Source: EBA Press Release

The EBA published final guidelines on the “capital endowment” requirement for third-country bank branches under the EU’s Capital Requirements Directive. EU rules require any foreign bank branch to hold a certain amount of local assets (“endowment”) to protect local depositors if the parent fails. 

The new EBA guidelines set out exactly which assets qualify (e.g. cash, government bonds) and under what conditions they can be used to meet the endowment requirement. By clarifying the eligible instruments and operational requirements (for example, how quickly assets can be liquidated), the guidance ensures branches maintain sufficient onshore capital.

Implications

Third-country banks operating in the EU (e.g. U.S., Swiss, or Asian banks with EU branches) must now adjust their capital booking to use the approved instruments list. 

Firms should review the guidelines to confirm their chosen collateral qualifies as “endowment” and meets any usage conditions. Supervisors aim to ensure that branches truly have enough local cushion, so compliance functions should update their branch capital policies accordingly. The harmonisation reduces uncertainty for foreign banks by replacing vague rules with a clear list of allowed assets.

 EIOPA Invites Input on Streamlining Insurer/Pension Data

Source: EIOPA News Release

The European Insurance and Occupational Pensions Authority (EIOPA) launched a consultation seeking feedback on reducing duplicate data reporting for insurers and pension funds. 

Mandated by changes to Solvency II, EIOPA’s discussion paper maps out the current data collection landscape and explores how to create an integrated system (covering both insurers and occupational pensions) that would cut overlaps and lower compliance costs. While European insurers already have a harmonized reporting framework, the paper notes that pension fund data collection is far more fragmented. Stakeholders are invited to highlight specific inefficiencies and suggest solutions (via an online survey) by 10 June 2026.

Implications

Insurance and pension firms active across EU countries should consider responding. Input on which reporting requirements could be merged or eliminated will shape EIOPA’s final proposal. 

In practice, a consolidated data system would mean fewer forms and faster data sharing between regulators. Firms should review their current reporting processes to identify any needless duplications or gaps and be ready to explain them in their consultation responses.

Summary of Other Notable Updates

Jurisdiction	Regulator	Update	Source
United Kingdom	FCA	Targeted Support Gateway: Formally opened the authorization gateway on March 2, 2026. This allows firms to apply for a new regulated activity to provide group-based "ready-made suggestions" to help consumers with pensions and investments.	FCA
United States	SEC	Enforcement Leadership: Director Margaret A. Ryan resigned effective March 16, 2026, after six months in the role. The SEC shifted focus during her tenure toward high-impact misconduct like fraud and market manipulation rather than purely enforcement volume.	SEC
UK	BOE/ PRA	The Bank of London Fine: On March 24, 2026, the PRA fined The Bank of London and its parent, Oplyse Holdings, £2 million for failing to act with integrity and providing fabricated documents. This is the first time the PRA has fined a firm specifically for a lack of integrity.	BOE
United States	SEC	Rule 15c2-11 Amendments: Proposed changes on March 16 to formally limit the rule’s scope to equity securities. This codifies the understanding that the rule's information-gathering requirements apply to OTC equities and not the broader fixed-income market.	SEC
Australia	ASIC	Macquarie Securities Penalty: The NSW Supreme Court ordered Macquarie to pay a $35 million (AUD) penalty. The fine addressed systemic failures that led to the misreporting of over 73 million short sales between 2009 and 2024.	ASIC
India	RBI	Public Sector Bank Fines: The RBI penalized Union Bank (₹95.40 lakh) and Central Bank (₹63.60 lakh). Violations included delays in crediting unauthorized electronic transactions and non-compliance with KYC registry norms.	TaxPublishers

Stay informed with our regulatory updates and join us next month for the latest developments in risk management and compliance!

For any feedback or requests for coverage in future issues (e.g., additional countries or topics), please contact us at info@riskinfo.ai. We hope you found this newsletter insightful.

Best regards,

The RiskInfo.ai Team