EU & UK Reg Round Up: 24/04/2025
European Banking Authority
A material gender pay gap persists across EU banks and investment firms, the EBA observes in its Benchmarking Report - 15 April 2025
The EBA’s 2025 Remuneration and Gender Pay Gap Benchmarking Report highlights a persistent and material gender pay gap across EU banks and investment firms. In 2023, women earned on average 24.5% less than men in institutions and 32% less in investment firms, with the gap even wider among identified risk-takers. The disparity stems largely from women’s underrepresentation in higher-paying roles-only 33.5% of top roles in institutions and just 13% in investment firms were held by women. While remuneration practices in institutions remained stable from 2021 to 2023, investment firms saw a significant rise in variable-to-fixed pay ratios due to the Investment Firms Directive, with some roles reaching bonus levels over 500%. The EBA calls on institutions and regulators to address these disparities and is updating its governance guidelines to enhance gender pay and representation monitoring.
EBA publishes its Peer Review on the performance of stress tests by Deposit Guarantee Schemes - 07 Apri l 2025
The EBA published a Peer Review on how national Deposit Guarantee Schemes (DGSs) across the EU conduct stress tests, based on benchmarks from the DGSD and revised EBA guidelines. All seven DGSs reviewed had solid frameworks and cooperation with authorities, but only five fully met expectations for test coverage, scenario complexity, and identifying improvements.
The report calls for enhanced consistency and stronger stress testing practices across all DGSs. It also highlights 194 tests conducted EU-wide between 2021–2024, with a follow-up review planned in two years to assess progress.
The EBA publishes its annual assessment of banks’ internal approaches for the calculation of capital requirements - 04 April 2025
The EBA has released its 2024 benchmarking reports assessing banks’ internal models for calculating capital requirements for market and credit risk. This year, a new report on the Fundamental Review of the Trading Book’s Alternative Standardised Approach (FRTB ASA) was introduced. The findings show a continued decline in variability of risk measures like Value at Risk (VaR) and stressed VaR (sVaR), driven by better data submissions and clearer guidance. More complex measures like the Incremental Risk Charge (IRC) remain more dispersed. Supervisors were generally able to explain RWA deviations, and banks have begun implementing corrective actions. The ASA methodology, although still evolving, is already showing greater consistency in capital calculations than internal model approaches.
In the credit risk space, the share of exposures using the Internal Ratings Based (IRB) method has stabilized, while approved model changes have increased, signaling ongoing progress on the IRB roadmap. Variability in Probability of Default (PD) is on a downward trend, though Loss Given Default (LGD) variability remains mixed, particularly in retail portfolios where collateralisation plays a key role. Overall, the reports highlight steady improvements in model consistency and regulatory oversight.
The EU subsidiaries of third-country players account for 10% of total EU assets. Their presence is more significant in the derivatives market - 03 April 2025
The European Banking Authority (EBA) has published two key reports analysing the presence and activity of non-EU banking subsidiaries in the EU, alongside EU/EEA banks' foreign currency exposures and funding. As of December 2023, non-EU subsidiaries accounted for 10.17% of total EU banking assets, with notable concentrations in derivatives (33.73%), loans (8.17%), and debt securities (6.06%). Their asset base was largely tied to credit institutions and financial corporations, and over 80% of these assets were held outside their home country.
These subsidiaries showed significant income contributions from fee and commission services, particularly in commodities, fiduciary services, custody, and FX, indicating their growing influence in niche financial services. In terms of foreign currency exposure, nearly 30% of EU/EEA banks' assets and 21% of their funding were denominated in non-domestic currencies, with the US dollar making up 12% of total funding.Wholesale funding in foreign currencies is largely unsecured, sourced mainly from financial counterparties. Encouragingly, EU banks’ Net Stable Funding Ratios (NSFR) remain above minimum requirements, with USD funding showing improved stability, averaging 107.2% as of December 2023. However, for 60 banks, USD-specific NSFR still fell below 100%, highlighting areas of potential risk management focus.
European Securities and Markets Authority
ESMA publishes implementing rules on Liquidity Management Tools for funds - 15 April 2025
ESMA published draft Regulatory Technical Standards (RTS) and a final report on Guidelines (GL) for Liquidity Management Tools (LMTs) aimed at enhancing fund managers' ability to handle liquidity during market stress. The new rules, part of the revised AIFMD and UCITS Directive implementation, seek to harmonise the use of LMTS, such as side pockets, across the EU, where practices currently differ widely. These measures contribute to financial stability and the broader regulatory discussion around Non-Bank Financial Intermediation. The draft RTS has been submitted to the European Commission, which will decide on adoption within three months. Following adoption, ESMA will finalise and translate the Guidelines, allowing national authorities two months to confirm compliance.
ESMA makes recommendations to simplify ESG disclosure rules for benchmarks administrators - 09 April 2025
ESMA published the results of its first Common Supervisory Action (CSA) on ESG disclosures under the Benchmarks Regulation, conducted alongside national authorities. The review led to two sets of recommendations: one to the European Commission suggesting amendments to Level 2 measures to ease regulatory burdens on benchmark administrators, and another to benchmark administrators aimed at improving transparency and comparability of ESG information. ESMA highlighted the need for consistency across sustainable finance rules and will continue working with authorities and the Commission to promote supervisory convergence and ensure effective ESG disclosure oversight
ESMA consults on clearing thresholds under EMIR 3 - 08 April 2025
ESMA launched a consultation on new clearing thresholds under EMIR 3, aiming to refine the scope of the clearing obligation. The proposals cover updated threshold levels, hedging exemptions for non-financial counterparties, and a trigger mechanism for reviewing thresholds. The revised approach focuses on the risk from uncleared OTC derivatives, ensuring that only entities with significant activity face mandatory clearing. The consultation runs until 16 June 2025, after which ESMA will finalise the draft technical standards and submit them to the European Commission by year-end.
ESMA consults on rules for external reviewers of European Green Bonds - 07 April 2025
ESMA launched a consultation on the remaining draft technical standards (RTS) for external reviewers under the European Green Bonds Regulation. The RTS cover governance, internal controls, data quality, application procedures, and change notifications. Aimed at strengthening the credibility of external reviews and reinforcing investor trust in the green bond market, these standards are key to ensuring alignment with the green transition. Feedback is open until 30 May 2025, with ESMA planning to finalise and submit the RTS to the European Commission by 21 December 2025.
ESMA consults on transparency requirements for derivatives under MiFIR Review - 03 April 2025
ESMA opened a consultation on draft technical standards under the MiFIR Review, focusing on transparency for derivatives markets. The proposals address post-trade transparency for exchange-traded and OTC derivatives, rules for package orders, and data quality standards for the upcoming OTC derivatives consolidated tape. The consultation is open until 3 July 2025, after which ESMA will finalise and submit the standards to the European Commission in Q4 2025.
Bank of England
Eighth edition of the Regulatory Initiatives Grid - 14 April 2025
the FSA Initiatives Forum published the eighth edition of its Regulatory Initiatives Grid. This edition, delayed due to the 2024 General Election, outlines key regulatory developments impacting the financial services sector, including initiatives supporting growth, innovation, and financial stability, such as the Bank of England’s Digital Securities Sandbox and the PRA’s Matching Adjustment Investment Accelerator. It also reflects significant reprioritisations by the new Government, including the PRA’s one-year delay to Basel 3.1 implementation, now set for January 2027. The Grid remains a key tool for firms to anticipate and plan for regulatory change.
Prudential Regulation Authority Business Plan 2025/26 - 10 April 2025
The PRA's Business Plan 2025/26 outlines its strategic priorities aimed at ensuring financial stability, while supporting the competitiveness and growth of the UK economy. Key areas of focus include the implementation of the Basel 3.1 standards, which will now be delayed until 1 January 2027 to align with developments in the US, with full implementation set for 1 January 2030. The PRA also emphasizes its work on adapting prudential standards to the UK market, including measures to lower capital requirements for lending to SMEs, infrastructure, and trade finance. Alongside this, the PRA aims to enhance its risk-based supervision model, improving how it assesses business models and governance within firms.
The PRA also underscores its commitment to addressing emerging risks, including those related to non-bank financial intermediation and climate-related financial risks. The plan highlights the PRA's engagement with international regulators and its focus on aligning UK regulations with global standards. Furthermore, the PRA continues its efforts to promote a more competitive and innovative financial environment, with a focus on supporting growth through regulatory reforms, such as the tailoring of Solvency II and Basel 3.1. Internally, the PRA is enhancing its operational capabilities, implementing new rule-making powers under the Financial Services and Markets Act 2023, and investing in staff development and digital transformation.
Regulated fees and levies: Rates proposals for 2025/26 - 10 April 2025
The consultation paper CP8/25 outlines the proposed regulated fees and levy rates for the 2025/26 period, focusing on adjustments to the fees charged to firms regulated by the Prudential Regulation Authority (PRA). It seeks industry feedback on the proposed fee structure for the upcoming year, highlighting changes intended to ensure the efficient operation of the PRA. The consultation also discusses the financial burden on firms and includes calculations for proposed fees. Stakeholders are invited to comment on the proposals, with a deadline set for 15 May 2025.
Financial Stability in Focus: Artificial intelligence in the financial system - 09 April 2025
The April 2025 edition of Financial Stability in Focus by the Bank of England explores the implications of AI on financial stability. It highlights AI's potential to boost productivity, improve decision-making, and enhance customer experiences in finance. However, it also flags risks, including cybersecurity challenges, the potential for systemic disruptions, and issues related to operational resilience. The report emphasizes the need for careful monitoring to manage these risks effectively, ensuring AI benefits without jeopardizing financial stability.
Financial Policy Committee Record - 09 April 2025
The April 2025 meetings of the Financial Policy Committee (FPC) highlighted concerns over global risks such as deteriorating financial conditions, rising geopolitical tensions, and increasing vulnerabilities in market-based finance. The FPC emphasised the resilience of the UK banking sector and maintained the countercyclical capital buffer at 2%. Additionally, it discussed regulatory developments around stablecoins, AI, and private markets. The committee also supported a T+1 settlement cycle for UK markets to reduce counterparty risks and welcomed initiatives from HM Treasury and the FCA on market reforms.