The global financial regulatory framework is undergoing significant enhancements with recent updates from leading international bodies. The Basel Committee on Banking Supervision (BCBS) has issued finalized guidelines for counterparty credit risk management and, together with other standard-setters, released three final reports on margin in centrally and non-centrally cleared markets. Additionally, the Innovation Hub of the Bank for International Settlements (BIS) has announced its 2025-26 work program, setting the innovation agenda and priorities for the coming months.
The final guidelines for counterparty credit risk management at banks include key practices critical to resolving long-standing industry weaknesses in counterparty credit risk management. The Committee encourages full adoption of its guidelines by members and plans to continue to monitor implementation of the counterparty credit risk management guidelines on an ongoing basis. The guidelines will replace the BCBS-issued 1999 guidelines on sound practices for banks' interactions with highly leveraged institutions. The new guidelines emphasize the need to:
conduct comprehensive due diligence at both initial onboarding, as well as on an ongoing basis
develop a comprehensive credit risk mitigation strategy to effectively manage counterparty exposures
measure, control and limit counterparty credit risk using a wide variety of complementary metrics
build a strong counterparty credit risk governance framework
The three reports on margin in centrally and non-centrally cleared markets—from BCBS, the International Organization of Securities Commissions (IOSCO), and the Committee on Payments and Market Infrastructures (CPMI)—contain proposals and practices intended to improve transparency, streamline margin processes, and increase the predictability of margin requirements across these markets:
The report by BCBS, CPMI, and IOSCO on transparency and responsiveness of initial margin in centrally cleared markets sets out ten final policy proposals relevant to central counterparties and clearing members. The proposals seek to aid market participants' and regulators' understanding of initial margin requirements and responsiveness through increased transparency.
The CPMI and IOSCO published a final report on streamlining variation margin in centrally cleared markets. This report sets out eight effective practices to enhance market participants' liquidity preparedness for above-average variation margin calls through increased transparency and efficient collection and distribution of variation margin.
BCBS and IOSCO also published a final report on streamlining variation margin processes and enhancing the responsiveness of initial margin models in non-centrally cleared markets. This report sets out eight recommendations to encourage the widespread implementation of good market practices in this area.
Finally, the updated 2025-26 work program of the BIS Innovation Hub sets out the following key action points:
Enhancing Horizon Scanning: Strengthening capabilities to identify trends and developments in financial technology that could impact central banks
Exploring Synergies: Focusing on developing solutions that support central banks in their core responsibilities, such as monetary policy, payments infrastructure, financial stability, and regulation and supervision
AI-Enabled Tools: Launching two new projects using AI-based tools: Project AISE (or Artificial Intelligence Supervisor Enhancer), which will develop a virtual assistant for financial supervisors to automate key tasks and enhance on-site supervision and Project Gaia, which involves extending the proof of concept for climate-related risk analysis to other use cases within and beyond green finance.
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