Prudential / Capital Requirements in European Union

Key dates

2026-08-26

EBA consultation launched and consultation period opened.

2026-09-25 Deadline

Deadline to register for the EBA virtual public hearing, at 16:00 CEST.

2026-09-29

EBA virtual public hearing from 10:00 to 12:00 CEST (Paris time).

2026-12-31 Deadline

Deadline for submitting consultation responses to the EBA, at 23:59 CEST.

Suggested considerations

• Compliance and operational-risk teams should obtain and map the consultation draft against Article 323(1), points (a) to (h), of the CRR and identify requirements that would require changes to policies, committee mandates, controls or management information.
• Institutions should determine their business indicator and assess whether it is below the proposed EUR 750 million proportionality threshold, while treating that threshold as proposed rather than final.
• Firms should inventory operational-risk data sources, loss-event thresholds, taxonomies, reporting processes, validation controls and audit coverage, and assess whether data granularity is sufficient for the proposed framework.
• Management-body and senior-management responsibilities should be compared with existing governance arrangements, including the independence, authority and resourcing of the operational risk management function.
• Firms should assess alignment between the proposed RTS, CRR3 operational-risk capital and reporting implementation, the EBA Guidelines on internal governance and DORA, avoiding duplication or gaps for ICT-related risk.
• Affected stakeholders should consider submitting comments to the EBA by 31 December 2026; compliance teams may wish to coordinate responses with risk, finance, internal audit and industry associations.
• Stakeholders wishing to participate in the EBA public hearing should register by 25 September 2026 at 16:00 CEST and prepare questions on proportionality, data granularity, thresholds, reporting frequency and implementation timing.
• Institutions should monitor the EBA’s final draft, the European Commission’s endorsement process and the eventual application date before treating the consultation text as a binding requirement.

What changed

The proposed RTS would give detailed effect to Article 323(1), points (a) to (h), of the CRR by requiring three framework components: governance arrangements, an operational risk management process and an operational risk assessment system. They clarify responsibilities of the management body, senior management and the independent operational risk management function, and address operational risk data and taxonomy, the business indicator component, reporting, validation and audit. ICT risk requirements are intended to remain governed primarily by Regulation (EU) 2022/2554 (DORA).

Key dates

2026-08-25

EBA launched the consultation on three draft RTS.

2026-09-25 Deadline

Deadline at 16:00 CEST to register for the EBA virtual public hearing.

2026-09-30

EBA virtual public hearing scheduled from 10:00 CEST.

2026-11-25 Deadline

Deadline for submitting comments on the consultation.

Suggested considerations

• Firms should assess whether their solo and group-level asset populations capture all entities and activities covered by the CRD amendments, including the potential effect of EU branches and consolidated group assets.
• Compliance and finance teams may wish to reconcile the proposed threshold methodology against regulatory reporting, audited financial statements and internal management information, using a rolling 12-month monitoring process where relevant.
• Investment firms above EUR 5 billion should review the draft reporting templates and instructions and identify data, governance, validation and submission gaps before the RTS become applicable.
• Firms near the EUR 30 billion threshold should model the consequences of credit institution authorisation, including CRD and CRR application, supervisory engagement, capital and liquidity requirements, governance expectations and implementation timelines.
• Groups potentially affected by the group test should consider submitting comments on the geographic scope of assets, treatment of branches, consolidation methodology and any disproportionate effects on cross-border business models.
• Potentially eligible firms may wish to prepare evidence against the proposed waiver factors and engage early with their competent authority, while recognising that a waiver is discretionary and not guaranteed.
• Stakeholders wishing to participate in the EBA public hearing should register by the stated registration deadline and firms wishing to influence the final RTS should submit consultation responses by 25 November 2026.

What changed

The EBA is revising its draft RTS following the 2024 amendments to the Capital Requirements Directive, including clarifications on which entities and assets must be included in the threshold calculation at solo and group level. The package addresses the methodology for calculating total assets against the EUR 30 billion threshold, reporting requirements for investment firms whose total assets exceed EUR 5 billion under Article 55(5) of the Investment Firms Regulation, and the factors competent authorities must consider when deciding whether to grant a waiver under Article 8a(7) of the CRD.

Key dates

2026-08-18

ESMA launched the consultation on draft EMIR RTS and ITS for annual reporting of clearing activity at recognised third-country CCPs.

2026-10-12 Deadline

Deadline for stakeholders to provide feedback on the reporting framework, templates and format.

Suggested considerations

• Compliance teams may wish to submit comments on the proposed framework, templates and reporting format by 2026-10-12.
• Firms should consider identifying every recognised third-country CCP used by their EU entities and distinguishing direct clearing-member activity from client clearing activity.
• Reporting owners may wish to map the proposed Article 7d data points to existing EMIR Article 9 transaction reporting, margin, collateral, default-fund and treasury or payments data to determine what can be reused and what new data controls are needed.
• Groups should consider determining whether reporting will be performed by each EU entity or by the EU parent undertaking on a consolidated basis.
• Firms may wish to assess data availability by asset class and Union currency, calculation methodologies for annual average cleared values, and controls for margins, default-fund contributions and largest payment obligations.
• Technology and regulatory-reporting teams should consider designing provisional data lineage, reconciliation and governance processes, while treating implementation dates and final fields as subject to the final RTS and ITS.
• Firms should monitor ESMA’s Final Report and the subsequent adoption, endorsement and publication of the technical standards before treating the proposed reporting model as a final operative obligation.

What changed

This is a consultation rather than a final binding rule. ESMA proposes the reporting framework, templates and format required under EMIR 3 Article 7d for clearing members and clients that clear transactions through recognised third-country CCPs. Firms established in the EU and not part of an EU-consolidated-supervision group would report to their competent authority; where the firm belongs to such a group, the EU parent undertaking would report on a consolidated basis.

Key dates

2026-03-01

EBA central validation function for pro forma initial margin models under EMIR became operational

2026-08-05

Publication date of the EBA consultation on the reporting framework for validation and monitoring of ISDA SIMM

2026-11-02 Deadline

Deadline for submission of comments to the EBA consultation on ISDA SIMM reporting

2026-12-31

Indicative target for EBA adoption of a Decision establishing the collection of relevant information for ISDA SIMM validation reporting by end of 2026

2027-03-31

Expected release of the final EBA technical package version 4.4, Phase 2, incorporating the new reporting requirements

2027-12-31

Expected first reporting reference date for ISDA SIMM-related information under the new framework

2028-03-31

Expected first quarter of 2028 window for collection of initial ISDA SIMM validation and monitoring data based on the December 2027 reference date

Suggested considerations

• Compliance teams may wish to review the consultation paper, IMMV reporting instructions and templates to understand the proposed data fields, frequency and proportional thresholds for ISDA SIMM-related reporting under EMIR.
• Firms using or planning to use ISDA SIMM for non-centrally cleared OTC derivative initial margin calculations should consider whether they will fall under the more intensive or lighter reporting category based on the significance of their OTC trading activity and assess system readiness for the expected December 2027 reference date reporting in Q1 2028.
• Risk and collateral management functions may wish to map the proposed reporting requirements to existing SIMM backtesting, model performance, risk factor sensitivity and margin monitoring processes to identify gaps and necessary enhancements.
• Regulatory reporting and IT teams should consider planning for integration of the new IMMV reporting templates into their infrastructure, taking into account the incorporation of these requirements into the EBA technical package version 4.4, Phase 2 and the planned final technical release in March 2027.
• Legal and regulatory affairs teams may wish to assess the implications of Article 11(12a) EMIR and EMIR 3 for their use of pro forma initial margin models, including governance around EBA’s central validation function and associated fee obligations, and prepare internal feedback on the consultation by the 2 November 2026 deadline.
• Firms intending to rely on ISDA SIMM should consider engaging with the consultation process to comment on the proportionality of the proposed reporting frequency and content, especially where OTC trading activity is limited but compliance costs could be significant.
• Supervisory liaison teams at affected groups may wish to coordinate with competent authorities to understand how the EBA’s data collection will be used in authorisation and ongoing supervision of ISDA SIMM-based initial margin models.

What changed

The consultation sets out a proposed standardised reporting framework for counterparties seeking validation to use ISDA SIMM as a pro forma initial margin model under Regulation (EU) No 648/2012 (EMIR) as amended by Regulation (EU) 2024/2987 (EMIR 3). From 1 March 2026, the EBA acts as the central validator of the elements and general aspects of pro forma initial margin models pursuant to Article 11(12a) EMIR, and this proposal defines the information that must be submitted on a regular basis to enable validation and ongoing performance monitoring.

Key dates

03 August 2026

- ESAs publish the Final Report and draft RTS proposing amendments to Delegated Regulation (EU) 2016/2251 to simplify bilateral margin requirements for counterparties below the EUR 8 billion initial margin threshold

TBD (European Commission adoption)

- The European Commission reviews and, if satisfied, endorses the draft RTS amending the EMIR bilateral margin Delegated Regulation; exact date to be set by the Commission’s internal process

TBD (European Parliament and Council scrutiny)

- Following Commission endorsement, the RTS are subject to scrutiny by the European Parliament and the Council under the standard RTS procedure before publication in the Official Journal

TBD (Entry into force – OJ publication + 20 days)

- The amended RTS enter into force on the date specified in the Official Journal (typically 20 days after publication), from which firms can legally apply the new exemption regime

TBD (Three years after entry into force) Deadline

- By the date three years after entry into force, the ESAs must complete a review of the application and impact of the exemption from initial margin requirements in Article 28(1), potentially informing further changes

Suggested considerations

• Map all EMIR in-scope entities within the group and identify those whose AANA of non-centrally cleared OTC derivatives is close to or below the EUR 8 billion threshold, to assess which relationships may benefit from the expanded exemption.
• Review current collateral and margin frameworks to identify legacy contracts where initial margin is still being exchanged solely because the regime requires continuation despite the counterparty having fallen below the EUR 8 billion threshold.
• Prepare an internal policy update so that, once the RTS enter into force, initial margin requirements are switched off for counterparties below the EUR 8 billion threshold on both new and existing uncleared OTC derivatives, subject to group risk appetite.
• Update EMIR margin procedures and AANA calculation processes to ensure accurate annual determination of whether each counterparty is above or below the EUR 8 billion threshold, including documentation of the March–May calculation methodology.
• Review and amend collateral agreements, credit support annexes (CSAs) and associated legal documentation to incorporate the revised treatment for below-threshold counterparties, including terms for stopping margin exchange and potentially releasing segregated collateral.

What changed

• - Counterparties whose average aggregate notional amount (AANA) of non-centrally cleared OTC derivatives falls below the EUR 8 billion threshold will no longer be required to exchange initial margin...
• The current framework, under which below-threshold counterparties are exempt from initial margin for new trades but must continue to exchange initial margin for pre-existing “legacy” contracts, will...
• Article 28(1) of Delegated Regulation (EU) 2016/2251 will be amended to explicitly extend the exemption from initial margin requirements to outstanding contracts where one of the two counterparties...
• The RTS introduce a clearer operational framework for entry into and exit from the initial margin regime based on the annual AANA calculation for March–May, including scenarios where one or both...
• Once a counterparty falls below the EUR 8 billion threshold under the revised rules, firms will be permitted to terminate related initial margin processes, including ceasing ongoing calculation,...

Key dates

2026-06-04

European Commission adoption of the 3rd FRTB Delegated Act under Article 461a CRR modifying own funds requirements for market risk for a three-year period

2026-08-03

EBA publication of no-action letter on the trading/banking book boundary and internal risk transfers, and technical considerations on FRTB application

2027-01-01

Start of modified calculation of own funds requirements for market risk under the 3rd FRTB Delegated Act for a three-year period

Suggested considerations

• Compliance teams at EU banks should consider reviewing the EBA no-action letter to understand which aspects of the FRTB boundary between banking book and trading book, internal risk transfers, and related reporting are currently deprioritised for supervisory or enforcement action, and how this interacts with national competent authority expectations.
• Risk and regulatory capital teams may wish to map their existing and planned FRTB implementation (standardised and internal models approaches) against the technical considerations published by the EBA, focusing on how the 3rd FRTB Delegated Act’s institution-specific multiplier and related boundary rules affect market risk capital calculations from 2027-01-01.
• Firms should consider identifying whether they fall within the scope of "multiplier banks" under the Delegated Act and assess operational implications, including whether their systems and data architecture can support a single, harmonised boundary framework rather than multiple versions during the three-year transitional period.
• Supervisory reporting and Pillar 3 disclosure teams may wish to analyse the EBA’s clarifications on reporting requirements linked to the trading/non-trading book boundary and internal risk transfers to determine whether current templates, data points, and governance need adjustment ahead of the Delegated Act’s entry into force.
• Institutions participating in the EBA supervisory benchmarking exercise should consider reviewing the clarified treatment of institutions in that exercise under the revised FRTB framework, and ensure their benchmarking submissions and internal controls are aligned with the EBA’s technical considerations.
• Legal and regulatory policy teams may wish to monitor the scrutiny process of the 3rd FRTB Delegated Act by the European Parliament and Council, as the practical relevance of the no-action letter and technical considerations is contingent on the Delegated Act entering into force as adopted on 2026-06-04.

What changed

The EBA has formally issued a no-action letter recommending that competent authorities do not prioritise supervisory or enforcement action regarding provisions of the FRTB framework that govern: (i) the boundary between the banking book and the trading book; (ii) internal risk transfers between these books; and (iii) certain related reporting requirements, during the transition to the revised market risk regime.

Key dates

2026-08-03

ESAs publish final report and draft RTS proposing amendments to Delegated Regulation (EU) 2016/2251 bilateral margin requirements

Suggested considerations

• Compliance teams may wish to review current EMIR margin frameworks and inventories of uncleared OTC derivatives to identify portfolios and counterparties that are below the €8 billion initial margin threshold and could be affected by the proposed phase-out of initial margin exchange.
• Risk and collateral management functions should consider assessing the operational processes, documentation and systems currently used to calculate, call and exchange initial margin on legacy uncleared OTC derivative contracts, to understand the potential impact of a removal of these obligations on collateral flows and counterparty risk management.
• Legal and documentation teams may wish to map existing credit support annexes (CSAs) and collateral agreements to EMIR margin requirements, evaluating whether standard terms referencing Delegated Regulation (EU) 2016/2251 would need amendment if the RTS are endorsed and the obligation to exchange initial margin for below-threshold portfolios is removed.
• Regulatory affairs and policy teams should consider monitoring the European Commission’s endorsement process and subsequent scrutiny by the European Parliament and Council, tracking any changes to the draft RTS text that could affect scope, thresholds or transitional arrangements.
• Firms subject to EMIR in multiple jurisdictions may wish to compare the proposed EU treatment of below-threshold initial margin portfolios with requirements in other key jurisdictions (e.g. US, UK) to ensure consistent cross-border collateral and margin policies and avoid regulatory arbitrage or misalignment.
• Compliance teams may wish to prepare briefing materials for senior management and boards outlining the anticipated simplification and burden reduction, alongside any residual risks or supervisory expectations that could accompany the phase-out of initial margin for below-threshold counterparties.

What changed

Under the current EU bilateral margin framework in Delegated Regulation (EU) 2016/2251, counterparties with an aggregate average notional amount of non-centrally cleared derivatives below the €8 billion initial margin threshold specified in Regulation (EU) No 648/2012 (EMIR) are exempt from exchanging initial margin on new uncleared OTC derivative contracts, but must continue to exchange initial margin on existing contracts.

Key dates

2026-07-24

EBA published the draft technical package for reporting framework 4.4 and opened the consultation

2026-08-24 Deadline

Deadline for stakeholders to submit comments and suggestions on the draft technical package 4.4 and new glossary

2026-09-30

EBA expects to publish the final technical package for reporting framework 4.4

2026-12-31

First reference date for amended Pillar 3 ESG, equity and shadow banking disclosures; technical amendments for resolution planning, MREL decisions, Pillar 3 disclosure templates; and AMLA eligibility templates

2027-03-31

First reference date for new IFRS 18-aligned FINREP templates and FRTB-related disclosure templates

2027-12-31

First reference date for Pillar 3 ESG, equity and shadow banking disclosures for SNCIs

Suggested considerations

• Compliance teams may wish to assess the draft 4.4 package against current reporting architecture, especially where FINREP, Pillar 3, FRTB, resolution planning, MREL, or AMLA templates rely on local mapping or vendor implementation.
• Firms may wish to review the new IFRS 18-aligned FINREP templates and identify any chart-of-accounts, data lineage, or consolidation changes needed ahead of the 2027-03-31 first reference date.
• Reporting teams may wish to map the updated Pillar 3 ESG, equity exposure, and shadow banking disclosures to the 2026-12-31 reporting cycle, and to 2027-12-31 for SNCIs.
• Institutions may wish to compare their DPM 1.0 to DPM 2.0 conversion controls against the new glossary conversion file and plan for taxonomy or validation rule changes in downstream reporting tools.
• Affected firms may wish to submit comments on the draft technical package and glossary by 2026-08-24 if they have implementation concerns, data gaps, or interpretation issues.
• Compliance functions may wish to monitor the expected September 2026 final publication for changes to validation rules, AML eligibility elements, and the AMLA risk assessment 2027 templates.

What changed

The draft technical package for release 4.4 includes validation rules, the Data Point Model, XBRL taxonomies, and a new conversion file between DPM 1.0 and the DPM 2.0 glossary. It introduces amendments to the ITS on Pillar 3 disclosures on ESG risks, equity exposures and shadow banking exposures, with first reference dates of 2026-12-31 and 2027-12-31 for SNCIs. It also adds new IFRS 18-aligned FINREP templates, with a first reference date of 2027-03-31, and integrates FRTB-related disclosure templates into the DPM, also with a first reference date of 2027-03-31.

Key dates

2026-07-23

EBA launches consultations on draft ITS on depositor information, ITS on information exchange, RTS on DGS payouts of client funds deposits, and Guidelines on investment of available financial means under DGSD3

2026-09-21 Deadline

Registration deadline (12:00 CEST) for public hearing on all four regulatory products

2026-09-24

Public hearing on the four DGSD3-related regulatory products (10:00–13:00 CEST)

2026-10-23 Deadline

Deadline for submission of comments to the four consultation papers

Suggested considerations

• Compliance teams at EU credit institutions should consider reviewing existing depositor information sheets, account-opening documentation and ongoing communications to assess alignment with the emerging harmonised formats and content envisaged by the draft ITS on depositor information, particularly for merger and failure scenarios.
• DGSs and banks may wish to map current data flows and reporting processes for covered deposits, available financial means and bank failure events against the proposed ITS on information exchange, to identify gaps in data granularity, timeliness, and standardisation that could require system and process changes.
• Firms that hold client funds in pooled or intermediary deposit accounts (such as investment firms or payment institutions) should consider analysing how client identification and segregation data are captured and shared with DGSs, in light of the draft RTS on client funds that aim to ensure accurate and timely reimbursement of underlying clients and avoidance of duplicate payouts.
• DGS operators and finance teams may wish to review investment policies, risk limits, eligible instruments and liquidity management frameworks for DGS financial means, to anticipate adjustments needed to comply with the forthcoming Guidelines on diversification, low risk and liquidity, including readiness to support resolution financing within the DGSD3 mandate.
• All affected stakeholders should consider preparing internal positions and impact assessments and submit consultation responses to the EBA by the stated deadline, highlighting operational challenges, data availability issues, and any potential conflicts with existing national frameworks for depositor protection and crisis management.
• Risk and treasury functions in banks may wish to engage with DGSs and supervisors to understand how enhanced reporting on covered deposits and DGS financial means under the ITS on information exchange could affect crisis-preparedness expectations, stress-testing assumptions and disclosure practices.
• Legal and regulatory affairs teams should consider monitoring the progression of these four draft instruments alongside the remaining eight technical standards and guidelines mandated by DGSD3, to plan for a coordinated implementation programme once final texts and application dates are confirmed.

What changed

The publication launches consultations on four draft regulatory products mandated by DGSD3: (i) Implementing Technical Standards on depositor information, which define harmonised content and format for depositor information sheets at account opening and on a regular basis, and specify communication requirements in special situations such as bank mergers or failures; (ii) Implementing Technical Standards on information exchange between credit institutions, Deposit Guarantee Schemes (DGSs) and other relevant authorities, introducing standardised procedures, templates and minimum information...

Key dates

2026-07-17

EBA published the final draft RTS and ITS on material acquisitions, material transfers, mergers and divisions under the CRD

Suggested considerations

• Compliance teams may wish to map proposed acquisition, transfer, merger, and division workflows against the draft minimum-information template and identify which data points are already held by competent authorities.
• Firms may wish to review whether planned intra-group transactions could qualify for the simplified treatment described in the draft RTS, including any discretion not to assess certain transactions.
• Groups planning mergers or divisions may wish to check which documentation can be reused from Company Law Directive processes and where CRD-specific supplements will still be needed.
• Legal and regulatory teams may wish to assess how multiple-notification scenarios are handled today and whether internal controls need to align with the proposed harmonised terminology and coordination timelines.
• Firms may wish to prepare for supervisory coordination across jurisdictions by identifying the authorities likely to be involved in cross-border transactions and the likely sequence of notifications.

What changed

The EBA’s final draft RTS would specify the minimum information to be provided for material acquisitions, material transfers of assets and liabilities, mergers, and divisions, together with a common assessment methodology for the prudential scrutiny of those transactions. The draft RTS also streamline notifications by excluding information already held by competent authorities and by allowing reliance on documentation prepared under Directive (EU) 2017/1132 (the Company Law Directive) for mergers and divisions.

Key dates

2026-07-17

EBA launches consultation on amendments to ITS for the 2027 market risk benchmarking exercise

2026-07-27 Deadline

Deadline (16:00 CEST) for registration to the public hearing on the consultation

2026-07-28

Public hearing on the consultation (14:00–15:30 CEST)

2026-09-03 Deadline

Deadline for submission of comments to the EBA consultation on the 2027 market risk benchmarking ITS amendments

2027-01-01

Application date of the European Commission’s FRTB Delegated Act referenced in the amended ITS

Suggested considerations

• Compliance teams at EU credit institutions using market risk internal models or the CRR3 Alternative Standardised Approach may wish to review the consultation paper and annexes (booking instructions, relevant dates, instruments and portfolios, template instructions, and templates) to understand proposed changes to the 2027 benchmarking data collection and reporting requirements.
• Firms applying or planning to apply CRR2 Internal Model Approach for market risk should consider the implications of the resumption of CRR2-IMA data collection and assess whether existing reporting processes and systems can be reactivated or need updating to meet the revised ITS templates.
• Institutions intending to use the CRR3 Alternative Standardised Approach for market risk may wish to assess the impact of being newly in scope of the EBA market risk benchmarking exercise, including internal governance, data availability, and operational readiness for participation in the second half of 2027.
• Firms that anticipate using the CRR3 Alternative Internal Model Approach may wish to monitor the postponement of AIMA data collection and evaluate how the uncertainty in the effective implementation date interacts with their internal model development timelines and supervisory expectations.
• Regulatory and reporting functions may wish to map current market risk reporting templates to the proposed reorganised and rationalised templates, identifying data gaps and system changes required once the final ITS enter into force.
• Compliance teams may wish to coordinate with risk and reporting teams to prepare a response to the EBA consultation by the 3 September 2026 deadline, particularly on practical aspects of template design, data availability, and timing of the 2027 benchmarking exercise.
• Institutions newly included in scope by virtue of using CRR3 ASA should consider whether additional internal documentation, model validation, and supervisory engagement are needed ahead of the second-half 2027 benchmarking exercise, given the EBA’s intention to adopt the final ITS earlier to give such institutions more preparation time.

What changed

The consultation proposes amendments to the ITS on supervisory benchmarking of market risk models for the 2027 exercise, updating the data collection framework and reporting templates used by institutions and competent authorities under Article 78 of Directive 2013/36/EU (CRD). The scope of the market risk benchmarking exercise would be expanded to include institutions applying the CRR3 Alternative Standardised Approach (ASA) for market risk, irrespective of whether they also use an Internal Model Approach (IMA).

Key dates

15 March (annually from 2025 onward) Deadline

- Recurring annual deadline for submission of the core ICAAP and ILAAP packages, including the Capital Adequacy Statement, Liquidity Adequacy Statement, risk inventory, stress testing information and liquidity stressed assumptions template

10 February 2025

- ECB publishes the clarification paper on ICAAPs and ILAAPs and respective package submissions, setting out new expectations on governance, content and submission processes

14 March 2025 Deadline

- For the SREP 2025 cycle only, general transition date by which all documents foreseen for annual submission must be provided to the ECB, marking the first application of the new two‑leg submission process and shortened deadline

15 March 2025 Deadline

- New general submission date for ICAAP and ILAAP information becomes effective, replacing the former 31 March deadline for annual packages and applying to ICAAP quantifications, ILAAP templates and other annual information

Continuous (from SREP 2025 cycle onward)

- Ongoing, year‑round obligation to submit to the ECB any new or significantly updated ICAAP/ILAAP‑relevant documents, together with a description and justification of changes and their implications for capital and liquidity adequacy

Suggested considerations

• Review existing ICAAP and ILAAP submission calendars and internal governance timelines and formally reset them to ensure core packages can be prepared, approved by the management body, and submitted by 15 March each year.
• Design and implement a documented two‑step submission process, including procedures for continuous, year‑round identification, approval and transmission to the ECB of any new or materially updated ICAAP/ILAAP‑relevant documents.
• Develop, approve and embed the new Capital Adequacy Statement and Liquidity Adequacy Statement, ensuring they reflect the management body’s signed‑off view on adequacy and are supported by clear references to ICAAP/ILAAP analyses and results.
• Update ICAAP and ILAAP governance frameworks to reflect ECB expectations, including explicit roles and responsibilities, escalation paths, periodic reviews triggered by external developments, and Board‑level oversight of capital and liquidity planning.
• Compile and maintain a comprehensive risk inventory covering both normative and economic perspectives, and ensure it is aligned with business models, risk appetite frameworks, recovery plans, stress testing programmes and SREP submissions.

What changed

• - Introduced a two‑step ICAAP/ILAAP submission model under the SREP: (1) annual submission of the main “ICAAP & ILAAP package” by 15 March and (2) continuous, year‑round submission of any new or...
• Shortened the standard annual deadline for ICAAP/ILAAP information from 31 March to 15 March, reducing the preparation and governance window by roughly two weeks versus prior practice.
• Confirmed that the clarifications apply from the SREP 2025 cycle onwards, with a general transition approach for 2025 and limited transitional flexibilities for banks whose internal processes cannot...
• Required inclusion of two distinct, concise documents within the annual packages: a “Capital Adequacy Statement” and a “Liquidity Adequacy Statement” reflecting the management body’s formal view on...
• Clarified governance expectations around capital and liquidity planning, including regular updates of governance frameworks to reflect external conditions and the submission of a complete risk...

Key dates

Q4 2025

- ESMA conducted a public consultation on the draft RTS

November 2025

- ESMA held a public hearing on the draft RTS

05 January 2026

- The consultation period referenced in ESMA’s prior consultation paper closed

08 July 2026

- ESMA published the Final Report on the RTS concerning CCP admission criteria elements

TBD (post

08 July 2026); - The RTS will be submitted to the European Commission for endorsement

Suggested considerations

• CCPs should review their current admission criteria to ensure they are explicitly tied to a documented assessment of risks posed by each clearing member type.
• CCPs should update membership rulebooks and onboarding procedures to reflect the RTS requirement to consider financial resources, operational capacity, and liquidity support arrangements.
• CCPs should build or refine documented methodologies for assessing NFC clearing members’ ability to meet margin and default fund obligations.
• CCPs should ensure sponsored membership frameworks clearly define how the sponsor’s support, the sponsored member’s profile, and relevant risk controls are assessed for eligibility purposes.
• CCPs should prepare to publish clear admission criteria, application steps, timelines, required documentation, and explanations for any category-specific requirements.

What changed

• - CCPs must base admission criteria on a comprehensive risk assessment of the risks posed by clearing members and ensure the criteria reflect those risks.
• CCPs must consider whether clearing members have sufficient financial resources to meet obligations arising from participation in the CCP.
• CCPs must assess whether clearing members have access to reliable credit, liquidity, and foreign exchange facilities commensurate with the scale and nature of their clearing activity.
• CCPs must examine the clearing member’s operational capacity to meet CCP obligations, including readiness to support clearing operations and margin obligations.
• CCPs must take account of the client clearing activity of a clearing member, including the relative importance of that activity and the member’s ability to meet margin requirements if clients default.

Key dates

24 December 2024

– EMIR 3 enters into force, establishing the legal basis for the Active Account Requirement and related RTS framework

2025 (full year)

– First year of operation of the Joint Monitoring Mechanism, covering monitoring of AAR implementation and broader EU clearing landscape developments, as described in the JMM’s first Annual Report

25 June 2025 Deadline

– Active Account Requirement becomes applicable, starting the reference period for AAR compliance and reporting and triggering obligations to maintain an active account at an EU CCP for specified derivatives

February 2026 (as of)

– Approximately 500 entities have notified ESMA and national competent authorities that they are subject to the AAR, marking a key supervisory data‑collection milestone

26 February 2026 Deadline

– Regulatory Technical Standards specifying detailed AAR conditions, including operational obligations, stress‑testing, activity and reporting requirements, enter into force, operationalising how the AAR must be met in practice

Suggested considerations

• Confirm whether your entity (and any funds or branches) is subject to the Active Account Requirement by assessing EMIR clearing obligation status and relevant notional clearing volumes against EMIR 3 thresholds for AAR‑scope derivatives.
• Implement and document annual stress‑testing of the active account arrangements, including at least one test per year, to evidence that positions and new trades can be shifted from Tier 2 CCPs to EU CCPs under stress scenarios.
• Map and quantify exposures to Tier 2 CCPs across AAR‑relevant derivatives, and establish an internal monitoring framework to track shifts in clearing volumes between Tier 2 CCPs and EU CCPs in line with AAR objectives.
• Align trade booking, clearing workflows, and client documentation so that the required minimum number of trades per relevant subcategory and contract class can be cleared through the EU active account on an annual average basis, taking into account representativeness requirements where applicable.
• Prepare to submit the first AAR report by 31 July 2026, ensuring that systems and controls can capture and report activity from 25 June 2025 to 30 June 2026 in accordance with ESMA’s reporting templates and instructions.

What changed

• - ESMA has published an Interim Report on the effectiveness of the Active Account Requirement, covering implementation and market impact during 2025 and early 2026, and explicitly framing this as the...
• ESMA confirms that roughly 500 entities have formally notified ESMA and national competent authorities that they are subject to the AAR, indicating that competent authorities now have a defined...
• Notified entities represent more than 90% of notional outstanding held by EU entities in relevant AAR‑scope derivatives, signalling supervisory focus on a concentrated set of high‑exposure...
• ESMA identifies early signs of increased clearing activity at EU CCPs, particularly among smaller entities, including some full relocation of positions from Tier 2 CCPs to EU CCPs for AAR‑relevant...
• ESMA notes a gradual but limited shift in market shares from systemically important Tier 2 CCPs to EU CCPs in certain AAR‑related products, indicating that supervisors will monitor market‑share...

Key dates

30 April 2023

- ESMA’s withdrawal of recognition decisions for six Indian CCPs, including CCIL, took effect under EMIR, prohibiting EU clearing members and trading venues from using those CCPs for EU‑regulated clearing activity

Earlier 2026

- ESMA and the Reserve Bank of India sign a Memorandum of Understanding establishing supervisory cooperation arrangements for Indian CCPs, including CCIL

30 June 2026

- ESMA’s decision recognising CCIL as a Tier 1 third‑country CCP under EMIR takes effect, and CCIL is added to ESMA’s updated list of recognised TC‑CCPs

Suggested considerations

• Confirm and document that CCIL now appears on ESMA’s official list of recognised third‑country CCPs and that its status is Tier 1 under EMIR, updating internal CCP eligibility lists and counterparty approval registers accordingly.
• Review and update internal clearing policies, procedures and governance documents to reflect that EU entities may again clear eligible products through CCIL, subject to EMIR and firm‑specific risk appetite.
• Reassess and formally approve CCIL within the firm’s CCP due‑diligence framework, including credit risk, operational risk, legal risk and jurisdictional risk assessments, taking account of the RMU with RBI and the Tier 1 classification.
• Update EMIR compliance mappings to ensure that trades cleared via CCIL are correctly treated for clearing obligation, risk‑management, reporting and collateral requirements, and that no activity is undertaken through non‑recognised CCPs in India.
• Coordinate with front‑office, clearing operations and collateral management teams to re‑open or adjust clearing access to CCIL (e.g. membership arrangements, client clearing channels, account structures, margin and collateral workflows).

What changed

• - CCIL is formally recognised as a Tier 1 third‑country central counterparty (TC‑CCP) under Regulation (EU) No 648/2012 (EMIR), allowing it to offer clearing services to EU clearing members and EU...
• The recognition is contingent on an equivalence decision adopted by the European Commission for the Indian regulatory framework applicable to CCPs under EMIR Article 25.
• ESMA has assessed and confirmed effective supervision and enforcement by the Reserve Bank of India (RBI) over CCIL as a prerequisite for recognition.
• ESMA and RBI have put in place cooperation arrangements, formalised through a Memorandum of Understanding, to support ongoing supervisory coordination over CCIL’s activities that affect EU...
• CCIL is now included in ESMA’s updated list of recognised third‑country CCPs, clarifying that EU firms may use CCIL’s clearing services while complying with EMIR’s clearing and risk‑management...

Key dates

15 October 2013

- Council Regulation (EU) No 1024/2013 enters into force, granting the ECB sanctioning powers for prudential supervision of credit institutions (contextual basis for this enforcement)

Q4 2023

- Start of the period during which BIL failed to apply its approved internal models to expected loss calculation for defaulted retail and corporate exposures, leading to overstated capital

Q1 2024

- Second consecutive quarter in which incorrect expected loss and IRB shortfall calculations continued to affect reported capital and capital ratios

Q2 2024

- Third consecutive quarter of miscalculation; end of the period identified by the ECB as affected by the breach

29 June 2026

- The ECB publishes its decision imposing an administrative penalty of €3.255 million on BIL for the severe breach of its decision on internal models

Suggested considerations

• Review and confirm that all regulatory capital calculations, including expected loss and IRB shortfall for defaulted exposures, consistently use the approved internal models as authorised by the ECB or national competent authority.
• Map and reconcile the internal-model implementation across risk systems, finance, and regulatory reporting to ensure that there are no manual overrides, alternative methods, or parallel calculations that deviate from the approved model specifications.
• Strengthen model risk governance by ensuring that any proposed changes to expected loss methodologies, including for defaulted retail and corporate portfolios, are formally approved by the competent authority before being used in regulatory capital reporting.
• Implement robust controls and periodic testing within Finance, Risk, and Regulatory Reporting functions to detect and prevent misapplication or non-application of approved internal models, with clear escalation procedures for identified discrepancies.
• Ensure that the calculation of IRB shortfall (difference between expected loss and accounting provisions) is independently validated and appropriately deducted from CET1 capital in accordance with CRR and ECB internal models guidance.

What changed

• - The ECB has reaffirmed that institutions using internal ratings-based (IRB) approaches must apply their approved internal models consistently for expected loss calculation on defaulted retail and...
• The ECB has underscored that the IRB shortfall (difference between expected loss and accounting provisions) must be correctly calculated and deducted from regulatory capital whenever expected loss...
• The ECB has classified intentional failure to apply approved internal models to expected loss calculations as a “severe” breach under its Guide to the method of setting administrative pecuniary...
• The enforcement action confirms the ECB’s readiness to use its sanctioning powers under Article 18 of Council Regulation (EU) No 1024/2013 against internal-model users that misreport capital due to...
• The case highlights that miscalculation of expected loss and IRB shortfall over multiple reporting periods, even without an explicit capital ratio breach of minima, can be sanctioned where capital...

Key dates

26 June 2026

- ECB announces the comprehensive review of around 130 supervisory guidance publications, confirms discontinuation of about 40 outdated documents, and signals targeted and in‑depth revisions for the remaining guidance set

Q3 2026 (approx.)

- Revised **Guide to the internal capital adequacy assessment process** is expected to be published “shortly” after the press release, incorporating clarified treatment of the management buffer and its relationship to Pillar 2 guidance

Q3–Q4 2026 (approx.)

- Removal of supervisory expectations on **credit conversion factor (CCF)** from the **Guide to internal models** and the removal of **CVA references** from the **Guide on assessment methodology** and the **Guide on materiality assessment** are implemented as part of the ongoing review and alignment with EBA guidance and CRR III

Q4 2026–2027 (TBD)

- **Public consultations** will be launched on those guidance documents identified as needing substantial revision, ahead of finalising the updated versions

Q1 2027

- Publication of the new **report on good practices in governance and risk culture**, replacing the existing Draft guide on governance and risk culture, following finalisation of the revised EBA Guidelines on internal governance

Suggested considerations

• Review the ECB press release and associated lists of discontinued publications to identify any ECB guides, reports, letters or methodologies currently referenced in your internal policies, risk frameworks or model documentation that are now labelled as discontinued.
• Update internal policy inventories, regulatory mapping and compliance registers to reflect the new classification of ECB supervisory guidance as non‑binding and to distinguish clearly between binding EU/national law and non‑binding ECB expectations.
• For banks using the ICAAP Guide, perform a gap analysis of capital planning and management buffer practices against the forthcoming clarified expectations, ensuring internal documentation clearly differentiates management buffers from Pillar 2 requirements and guidance.
• For institutions using internal models for credit risk, remove any reliance on the ECB’s former CCF expectations by re‑mapping modelling policies and documentation to forthcoming EBA guidelines on credit conversion factors and to CRR/CRD provisions, once those guidelines are finalised.
• For risk and finance functions, review the CVA treatment in internal capital and risk methodologies to verify alignment with CRR III and ensure that internal references to ECB guidance (assessment methodology, materiality assessment) are updated to reflect the removed CVA content.

What changed

• - The ECB is conducting a comprehensive review of around 130 supervisory publications (guides, reports, letters, methodologies) to assess their relevance, effectiveness and clarity and to align them...
• Approximately 40 supervisory documents have been classified as outdated, superseded or no longer relevant and have been formally discontinued, with the texts remaining accessible but clearly labelled...
• The ECB has updated its classification of supervisory guidance documents to emphasise explicitly that they are non‑binding, do not create new legal obligations and do not replace binding EU or...
• The Guide to the internal capital adequacy assessment process (ICAAP Guide) will be revised to clarify supervisory expectations on the management buffer, explicitly positioning it as the bank’s own...
• The ECB has removed all content on supervisory expectations for the credit conversion factor (CCF) from the Guide to internal models, in anticipation of forthcoming EBA guidelines on CCF, thereby...

Key dates

13 November 2023

– Week-long 2023 Global CCP fire drill coordinated by ESMA and other authorities, simulating the default of a hypothetical major clearing member across more than 30 CCPs

5 December 2024

– Kick-off meeting for the second industry-led multi-CCP default simulation (CIDS 2025) organised by CCP Global in Singapore, setting parameters and expectations for the 2025 exercise

3 November 2025

– Start of the 2025 CCP Global International Default Simulation (CIDS) multi-CCP fire drill window (up to 7 November 2025 for some CCPs), simulating the failure of a hypothetical common participant

4 December 2025

– Debrief meeting in Singapore for CIDS 2025 participants to discuss operational outcomes, bottlenecks, and potential improvements

19 June 2026

– ESMA and the lead authorities publish the 2025 CIDS key findings and recommendations, outlining expectations for further progress in standardisation, porting, portal-based solutions, and potential market stress overlay modules

Suggested considerations

• CCPs should review and update their default management procedures to align with emerging cross-CCP standards, including harmonised communication conventions, standardised information templates, and coordinated auction timelines.
• Clearing members should conduct a cross-CCP gap analysis of their default-management playbooks to ensure they can support simultaneous auctions and calls from multiple CCPs without creating operational bottlenecks.
• CCPs and clearing members should implement or upgrade portal-based communication and workflow tools for default events, replacing fragmented email- or spreadsheet-based processes where feasible.
• Clearing brokers and client-clearing firms should test and, where necessary, redesign their porting arrangements (including client consent, documentation, booking models, and operational capacity) to ensure they can port positions and collateral under stressed but realistic timelines.
• Risk and operations teams at CCPs and clearing members should incorporate findings from the 2023 and 2025 CIDS exercises into their internal default-management training, drills, and board reporting on operational resilience.

What changed

• - Supervisory expectations are raised for standardisation and reduction of fragmentation in CCP default-management procedures and communication conventions, with a strong push toward harmonised...
• Lead authorities explicitly promote greater use of portal-based solutions (rather than ad hoc email or bespoke channels) for communication, information sharing, and auction-related workflows between...
• Authorities call for more realistic testing of porting arrangements, including end-to-end operational tests that reflect real-life constraints (documentation, client consent, timing of transfers, and...
• The lead authorities propose considering a voluntary “market stress overlay” module in future CIDS exercises, creating a coherent cross-CCP macro stress scenario to test whether operational capacity...
• ESMA confirms that global CCP fire drills are now a core component of system-wide resilience expectations, effectively embedding regular multi-CCP default simulations into ongoing supervisory...

Key dates

2022

2024; - Period during which BofA Securities Europe SA committed the breach across six consecutive reporting periods

27 March 2026

- ECB penalty announcement and effective date

Ongoing Deadline

- Bank has the right to challenge the decision before the Court of Justice of the European Union (no statutory deadline specified, but typically within 2 months of notification)

Suggested considerations

• *Immediate (for all firms with internal models):
• *Audit Internal Models Scope: Conduct comprehensive review of all asset classes currently included in internal models approaches to confirm supervisory permission exists for each category
• *Verify Sovereign Bond Derivatives Treatment: Specifically validate that all sovereign bond options, forwards, and other derivatives are explicitly covered by supervisory approval documentation
• *Reconcile RWA Calculations: Recalculate historical RWAs (at minimum for the past 3-5 years) to identify any unauthorized inclusions and assess whether prior reporting was accurate
• *Strengthen Internal Controls: Implement automated controls to prevent unauthorized asset classes from being included in model calculations, with documented supervisory permission matrices

What changed

• This enforcement action does not introduce new regulatory requirements but rather clarifies existing obligations:
• Internal Models Scope Limitation: Banks must strictly adhere to supervisory permissions when applying internal models approaches; unauthorized asset classes cannot be included regardless of...
• Risk-Weighted Asset Accuracy: RWA calculations must reflect actual supervisory permissions, not theoretical modeling capabilities
• Capital Ratio Integrity: Misreporting of RWAs directly affects CET1 ratios and capital adequacy disclosures, which are fundamental to regulatory reporting
• Intentionality Standard: The ECB's classification of this breach as "intentional" (rather than negligent) indicates that awareness of supervisory limitations combined with non-compliance triggers...

Key dates

2021

Regulatory change introduced prohibiting debtor assignment for guaranteed receivables; .[ECB Press Release]

Q1 2021 to Q4 2024 (13 consecutive quarters)

Period of breaches by Nordea Finance Finland Ltd; .[ECB Press Release]

10 March 2026

ECB announces €2.26 million penalty; .[ECB Press Release]

Suggested considerations

• Review Exposure Calculations: Immediately audit methodologies for guaranteed receivables, ensuring assignment to guarantors per 2021 rules; validate against CRR connected client principles.[ECB Press Release]
• Enhance Internal Controls: Implement robust governance to prevent "serious negligence," including automated checks, independent validation, and training on counterparty identification.[ECB Press Release]
• Conduct Gap Analysis: Test large exposure reporting for the past 4 years; remediate any breaches within EBA timelines (e.g., return to compliance promptly).
• Monitor and Report: Establish real-time monitoring for exposures >10% capital; notify ECB of breaches immediately with remediation plans.[ECB Press Release]
• Penalty Challenge Option: Affected firms may appeal to the Court of Justice of the European Union within standard timelines (typically 2 months).[ECB Press Release]

What changed

• - 2021 Regulatory Change: Prohibits assigning guaranteed receivables to debtors for large exposure calculations; exposures must be assigned to guarantors instead, ensuring proper risk attribution to...
• Large Exposure Limits (CRR): Exposures exceeding 10% of a bank's capital trigger reporting as "large"; no single exposure or group of connected counterparties may exceed 25% of capital.
• Severity Classification: ECB categorizes breaches as "severe" (from minor to extremely severe), guiding penalty calculations per its *Guide to the method of setting administrative pecuniary...
• Broader Framework: EBA Guidelines on large exposures provide criteria for assessing breaches and timelines for returning to compliance, emphasizing harmonized EU application.

Key dates

26 February 2026

- ESMA launches consultation

Q2 2026

- ESMA considers feedback received and prepares final report

20 April 2026 Deadline

- Deadline for stakeholder feedback submissions

Q4 2026

- Draft RTS submitted to the European Commission

Suggested considerations

• *For PTRR Service Providers:
• *Assess current operations against proposed RTS requirements, particularly regarding market risk neutrality and risk reduction thresholds
• *Review algorithm safeguards and execution protocols to ensure compliance with transparency and non-discrimination standards
• *Establish record-keeping systems capable of documenting PTRR exercises and demonstrating exemption qualification
• *Prepare monitoring capabilities to support NCA oversight and supervisory reporting

What changed

• The draft RTS introduce a structured framework governing how PTRR services operate under the clearing obligation exemption: Eligible Service Types The standards focus on three primary PTRR service...
• Market risk neutrality in PTRR exercises—transactions must not alter the overall market risk profile of portfolios
• Required risk reduction in submitted portfolios—genuine risk mitigation rather than speculative activity
• Compliance with pre-agreed rules and reasonable, transparent, non-discriminatory conduct Operational & Governance Framework The RTS establish requirements across multiple dimensions:
• Transparency towards participants in PTRR exercises

Key dates

15 April 2026, 14:00

15:30; - Public hearing on joint guidelines

15 April 2026, 15:30

16:30; - Public hearing on EBA RTS

25 May 2026 Deadline

- Deadline for submitting comments on joint guidelines and EBA RTS

Post

25 May 2026; - EBA publishes all contributions (unless requested otherwise)

TBD (post

consultation); - Revised guidelines enter into force, repealing 2021 guidelines

Suggested considerations

• Assess current suitability processes against new requirements (e.g., ex-ante applications, AML/CFT checks, third-country branch specs) and prepare for mandatory assessments of additional roles like CFOs.
• For large institutions, evaluate EBA RTS on documentation and align internal templates (e.g., suitability questionnaires, CVs).
• Participate in public hearings on 15 April 2026 if relevant.
• Plan governance updates, including ongoing monitoring of collective/individual suitability and corrective measures.

What changed

• - Incorporation of revised CRD requirements for large institutions, including ex-ante applications where authorities perform ex-post assessments, and mandatory suitability assessments for key roles...
• Expanded application to CRD-covered entities and MiFID II investment firms, with further specifications for third-country branches.
• Strengthened integration with AML/CFT framework, providing guidance on identifying reasonable grounds to suspect money laundering or terrorist financing risks during assessments.
• Introduction of targeted simplifications to streamline processes, reduce administrative burdens, and offer greater flexibility/clarity for institutions and supervisors.
• Parallel EBA consultation on RTS specifying standardized documentation (e.g., suitability questionnaires, CVs, internal assessments) for large institutions to ensure consistent submissions.

Key dates

End of 2026

- ESMA to submit final draft technical standards to the European Commission following final report preparation

30 April 2026 Deadline

- Consultation response deadline; submit online via ESMA portal, addressing specific questions with rationale

Suggested considerations

• Review and Respond to Consultation: CCPs, clearing members, NFCs, and clients should analyze the paper, prepare responses to Annex 1 questions by 30 April 2026, and submit online; indicate confidentiality if needed.
• Assess Internal Policies: CCPs must evaluate current collateral, investment, and emission allowance frameworks against proposed conditions; clearing members/NFCs should model impacts on liquidity and margin posting.
• Monitor Developments: Track ESMA's final report and RTS submission; prepare for potential supervisory expectations on guarantee acceptance and debt instrument eligibility post-2026.
• Engage with Industry: Join associations like EACH for coordinated feedback on risk-based approaches and proportionality.

What changed

• - Permanent expansion of eligible CCP collateral to include public guarantees, public bank guarantees, and commercial bank guarantees, with specified conditions for acceptance.
• Criteria for deeming debt instruments as eligible financial instruments under CCP investment policies.
• Requirements for highly secured arrangements to deposit emission allowances as margins or default fund contributions. These build on EMIR 3's measures to broaden collateral scope and entity coverage,...

Key dates

26 February 2026

- AAR RTS enter into force (20 days after Official Journal publication on 6 February 2026)

31 July 2026 Deadline

- First EMIR 3 representativeness reporting deadline

31 January 2027 Deadline

- First AAR compliance report due

Suggested considerations

• *Immediate (by 26 February 2026):
• Review the ESMA supervisory briefing and Commission Delegated Regulation (EU) 2026/305 in detail
• Assess whether your firm meets the €6 billion notional clearing volume outstanding threshold triggering AAR obligations
• Identify internal teams responsible for AAR compliance (trading, operations, compliance, reporting)
• *Short-term (by 31 July 2026):

What changed

The supervisory briefing addresses three core compliance areas: Identifying Most Relevant Subcategories: Counterparties must continuously identify the five most relevant subcategories for each class of derivatives over each reference period, based on their trading activity. The guidance clarifies that the number of subcategories to select equals the maximum number available for that derivative class. Representativeness Compliance Standard: Counterparties must clear, on an annual average basis, at least five trades in each of the most relevant subcategories per class of derivative contracts...

Key dates

2019

2024; - Period of breaches: 15 quarters of corporate exposure misclassification and 21 quarters of CVA transaction exclusions

19 February 2026

- ECB publishes decision imposing €12.18 million penalties on J.P. Morgan SE

Within time limits under Article 263 TFEU Deadline

- Deadline for J.P. Morgan to challenge the decision before the Court of Justice of the European Union (typically 2 months from notification)

Suggested considerations

• Conduct immediate RWA process reviews: Audit corporate exposure classifications and CVA calculations for misreporting risks, ensuring compliance with CRR risk weights.
• Strengthen internal controls: Implement robust validation mechanisms to detect errors timely, addressing "serious negligence" gaps highlighted by ECB.
• Enhance reporting accuracy: Recalibrate models and data inputs for quarterly ECB submissions; test for overstatement of capital ratios via underreported RWAs.
• Monitor ECB sanctions page (https://www.bankingsupervision.europa.eu/banking/supervisory-sanctions/html/index.en.html) for updates and self-assess against penalty guide severity categories.
• J.P. Morgan specifically: Pay €12.18 million and consider legal challenge under Article 263 TFEU.

What changed

This is an enforcement action, not a new rule change, but it reinforces existing requirements under the Capital Requirements Regulation (CRR) for accurate RWA calculations, including proper classification of corporate exposures for credit risk and inclusion of all relevant transactions in CVA risk (which measures counterparty default risk in derivatives). The ECB applied its Guide to the method of setting administrative pecuniary penalties, categorizing breaches as "severe" (credit risk) and "moderately severe" (CVA risk), based on duration, negligence, and impact on supervisory transparency.

Key dates

2020

- ECB published non-binding Guide on climate-related and environmental risks

2021

- ECB conducted economy-wide climate stress test covering 1,600 eurozone banks

2022

- ECB published guidance on climate stress testing; all significant institutions received feedback letters with staggered timelines

March 2023 Deadline

- ECB issued binding supervisory decisions to 28 banks with specific compliance deadlines

February 8, 2024

- ECB decision requiring Crédit Agricole to conduct C&E risk materiality assessment

Suggested considerations

• *Immediate (Q1 2026):
• related and environmental risks, documenting exposure across the portfolio
• *Near-term (H1 2026):
• related risks into existing credit risk, operational risk, and market risk frameworks
• testing purposes

What changed

The ECB's enforcement action reflects several critical regulatory developments: Mandatory Climate Risk Materiality Assessment Banks must now conduct comprehensive materiality assessments of climate-related and environmental risks as a binding supervisory requirement, not a guidance recommendation. The assessment must identify all material C&E risks to which the institution is or might be exposed. Binding Supervisory Decisions with Enforcement Teeth The ECB has transitioned from non-binding guidance (2020) to legally binding decisions with accruing daily penalties for non-compliance.

Key dates

08 January 2026

Publication of Final Report and Joint Guidelines by ESAs

10 January 2026 Deadline

Statutory deadline for ESAs to publish guidelines per CRD Article 100(4) and Solvency II Article 304c(3)

Two months after official EU translations (expected ~March/April 2026) Deadline

NCAs notify respective ESAs of compliance or intent to comply

01 January 2027

Application date of Joint Guidelines for NCAs

Suggested considerations

• For NCAs: Review and integrate ESG risks into stress testing frameworks via materiality assessments; define objectives, scenarios, and governance; notify ESAs of compliance post-translation; maintain risk-based, phased approach.
• For Firms: No direct mandates, but prepare by enhancing internal ESG risk modeling, data collection (especially climate/physical/transition risks), and stress testing capabilities to align with supervisory expectations; conduct voluntary ESG scenario analyses.
• General: Monitor NCA implementations, update policies for ESG risk integration in ICAAP/ORSA, and engage in industry feedback on data/methodological gaps.

What changed

• - Standardized Integration of ESG Risks: NCAs must embed ESG risks into existing supervisory stress tests or ad-hoc assessments, using a risk-based materiality assessment to scope relevant risks,...
• Methodological and Governance Guidance: Outlines design for ESG-inclusive tests, including objectives (e.g., capital/liquidity robustness, strategy resilience), scenario analysis, and organizational...
• No New Obligations: Does not require NCAs to conduct dedicated ESG stress tests, but ensures consistency when they do, improving legal certainty and transparency in approval processes.
• Phased Approach: Initial focus on climate/environmental risks, with gradual extension to full ESG coverage based on data and model maturity.