In the 20th week of 2025, we experienced a surge of significant regulatory updates across the global financial landscape. This blog summarizes the essential changes affecting banking, insurance, investment, and the wider compliance environment. From supervisory reforms and AI risk strategies to the introduction of new sandboxes and stress testing frameworks, these updates illustrate how regulators are responding to changing risks, technologies, and market conditions. For compliance teams and financial institutions, it’s crucial to understand these developments to remain proactive and informed.
Important Updates from Week 20
Business Line | Country | Regulator | Regulatory Update | Summary |
All | European Union | European Union | Proposed Changes to Corporate Sustainability Reporting Requirements | The European Commission has proposed amendments to four directives to refine corporate sustainability reporting and due diligence. The proposal narrows reporting obligations to undertakings with over 1,000 employees, easing burdens on smaller companies. It also introduces simplified sustainability standards for mid-sized firms with 500–999 employees. The timeline for adopting limited assurance standards remains 2026, but the deadline for reasonable assurance may extend to 2030. Sector-specific standards may follow later as guidelines. New thresholds and exemptions for third-country firms and subsidiaries aim to align with Directive (EU) 2024/1760 while ensuring data consistency. |
European Union | European Commission | The European Commission issued a corrigendum to Delegated Regulation (EU) 2024/1774, which supplements the Digital Operational Resilience Act (DORA). The amendment corrects a reference in Article 22(d) concerning ICT-related incident evidence retention. Originally citing Article 15 of Delegated Regulation 2024/1772, the corrected text refers to Article 8(2). This ensures proper alignment with data retention requirements based on the criticality of business functions and applicable Union law, enhancing clarity in ICT risk management obligations under the simplified framework. | ||
Luxembourg | CSSF | The Luxembourg CSSF published version 1.0 of its guidance to help financial entities interpret and resolve ESA error messages linked to the DORA register. This document details common technical and validation issues such as encoding problems, invalid LEI/EUID codes, incorrect file structures, and data model mismatches. It categorizes each issue by error code, explains causes, and provides step-by-step fixes. The guide also highlights rules for avoiding common data integrity issues and reinforces expectations for strict formatting compliance to ensure successful DORA submissions. | ||
United Kingdom | GOV.UK | UK Statutory Instruments | FSMA 2023 Rollout with Revocations Targeting Transparency and Capital Rules | The UK Treasury enacted the 9th commencement regulation under the Financial Services and Markets Act 2023. This regulation brings into force several revocations of legacy EU-derived and UK financial legislation. Key changes include repealing the EU’s bond market transparency rules (Commission Delegated Regulation 2017/583) and UK provisions concerning insurance supervision and macro-prudential capital buffers. These measures aim to streamline domestic regulation and support a tailored UK framework post-Brexit, with the final revocations taking effect by July 31, 2025. | |
United Kingdom | ICO | The UK Information Commissioner’s Office (ICO) has opened a consultation on its draft updated encryption guidance, aiming to clarify when and how encryption should be used under UK data protection law. The new version uses a “must, should, could” framework to distinguish legal obligations from best practices. Key updates cover storage, transfer, and processing of encrypted data, highlighting residual risks, proper key management, and scenarios like email, cloud, and IoT usage. Stakeholders are invited to comment by 24 June 2025 to help refine the final guidance. | ||
United Kingdom | UK Finance | A cross-sector UK taskforce, including CMORG, UK Finance, and FS-ISAC, released the AI Baseline Guidance Review to help financial firms manage risks from generative AI. The guide outlines good practices across five themes: regulation, risk management, technical controls, legal exposure, and education. It stresses aligning AI adoption with board-approved risk appetite, addressing model bias and hallucinations, securing data and user access, managing third-party exposure, and training staff against AI-driven phishing and deepfakes. The document supports voluntary uptake and complements emerging regulatory frameworks like the EU AI Act. | ||
Banking | European Union | EBA | Guidance on LCR and NSFR Implementation in Response to 2023 Banking Turmoil | The European Banking Authority has issued updated guidance on the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) following the 2023 banking stress. The report clarifies inflow recognition for open reverse repos, outlines criteria for distinguishing operational and excess deposits, and strengthens requirements around exempting retail deposits from outflows. It also adds guidance on interdependent assets in NSFR, focusing on indirect client clearing arrangements. The EBA stresses the need for stricter supervisory monitoring and harmonisation across banks to prevent regulatory inconsistencies and liquidity risk mismanagement. |
Japan | JFSA | Capital Treatment of Right-of-Use Assets in Lease Transactions | Japan’s Financial Services Agency updated its guidance on the regulatory treatment of Right-of-Use (ROU) assets in lease transactions. Under both the Standardised and Internal Ratings-Based Approaches, ROU assets related to tangible fixed assets are not deducted from regulatory capital. However, they must be included in credit risk-weighted assets. These assets should be assigned a 100% risk weight, consistent with the treatment of traditional tangible fixed assets. | |
United States | SIFMA | US Trade Groups Urge Fed to Clarify SCB Methodology During Stress Test Cycle | Four major US financial associations have urged the Federal Reserve to provide clarity on how it will apply the Stress Capital Buffer (SCB) methodology during the 2025 stress test cycle. The groups warn that uncertainty around proposed changes could hinder firms’ ability to disclose capital plans, comply with regulatory timelines, and manage investor expectations. They recommend the Fed confirm, by mid-June 2025, that firms may continue using the existing SCB rules through September 30, 2026. This would ensure stability during capital planning and prevent market confusion. | |
Insurance | Japan | JFSA | Japan’s Financial Services Agency released a draft amendment to enhance oversight of non-life insurance companies. The revisions address systemic issues like fraudulent claims and excessive benefits to agents. New rules strengthen agency audits, restrict unjustified incentives, and clarify commission structures. The draft mandates better information management, prevents inappropriate secondments, and promotes transparency in brokerage fees. It also targets cross-shareholding reduction and reinforces customer data protection standards. The changes respond to recent scandals and aim to ensure fair competition and customer-centric practices across the industry. | |
United Kingdom | FCA | Consultation on Simplifying Insurance Conduct Rules to Support Growth and Flexibility | The UK Financial Conduct Authority has proposed a sweeping reform of its insurance conduct rules to reduce regulatory burdens and encourage innovation. The consultation suggests replacing the “large risks” customer definition, easing product governance for co-manufactured and bespoke products, and removing rigid 12-month review cycles. It also proposes eliminating certain Employers’ Liability reporting rules and the 15-hour CPD mandate for insurance and funeral plan firms. These changes aim to make regulation more proportionate, support new entrants, and align oversight with actual risk, while maintaining strong consumer protections. | |
Investment | European Union | European Union | EU Reforms Benchmark Regulation to Ease Burden and Strengthen Oversight | The EU has revised Benchmark Regulation (EU) 2016/1011 to streamline compliance and enhance oversight. The amended scope now targets only significant, critical, and climate-aligned benchmarks, easing burdens for smaller administrators. ESMA gains broader powers, including recognition of third-country benchmarks and supervisory responsibilities. New thresholds, such as the €50 billion use benchmark, determine when a benchmark becomes significant. The update also removes unenforceable obligations, improves transparency on ESG claims, and mandates fallback planning. Spot FX benchmarks referencing currencies with controls may be exempt under specific criteria, pending EU Commission consultation and adoption. |
France | AMF | France’s AMF approved LCH SA’s rule modifications to enable clearing of digital asset derivatives. The updated rulebook sets governance, membership criteria, account structures, and risk management for clearing crypto-based derivatives. It introduces definitions for digital assets and their derivatives, mandates capital and collateral requirements, and outlines processes for default, resolution, and service wind-down. The framework emphasizes legal enforceability, segregation of client assets, and compliance with EU directives like MiFID2, EMIR, and BRRD. Clearing applies only to cash-settled products through approved trade source systems. | ||
Singapore | MAS | The Monetary Authority of Singapore released a consultation paper proposing to streamline IPO prospectus requirements and broaden investor outreach. The reforms simplify disclosure obligations for primary and secondary listings, focusing on material and decision-relevant information. Key changes include relaxed rules on interim financials and profit forecasts, and simplified filings for foreign issuers using IOSCO-aligned documents. MAS also proposes lifting publicity restrictions, allowing preliminary prospectuses and roadshows to reach retail investors earlier. Institutional investors may be engaged before lodgement, subject to safeguards ensuring information parity and control. | ||
United Kingdom | GOV.UK | UK Statutory Instruments | The UK Treasury enacted regulations to establish the Private Intermittent Securities and Capital Exchange System (PISCES) sandbox. This FMI sandbox enables testing of intermittent, private share trading platforms with flexible disclosure and trading rules. PISCES allows companies to control who trades their shares, when, and under what restrictions. Only authorised firms can operate PISCES, subject to FCA approval and supervision. The sandbox exempts participants from certain standard regulations and creates a tailored liability and investor protection framework. It will operate until June 2030 to evaluate potential permanent adoption. |
Conclusion
With regulatory frameworks constantly adapting to the fast-paced world of technology, market innovation, and evolving risks, compliance isn’t just about knowing the rules—it’s about being agile. FinregE provides financial institutions with advanced AI-driven regulatory intelligence, facilitating real-time horizon scanning, impact analysis, and automated workflows. Whether you’re tackling AI risk policies, stress capital requirements, or digital asset regulations, FinregE helps ensure your compliance processes are proactive, efficient, and prepared for what lies ahead. Book a demo today
