Following a busy start to 2026, federal financial services regulators have focussed on targeted changes for consultation over the upcoming summer months. The Superintendent of Financial Institutions (OSFI) issued its quarterly release on May 21, 2026, and held its related Industry Day on June 4, 2026, which provided more details on its new streamlined bank application process and launched consultations on various changes to liquidity and capital guidelines, among other items.
Streamlined Bank Applications
OSFI will be launching a targeted program on June 25, 2026, that aims to expedite its approval process for bank licenses. The pilot program will be available to provincial institutions looking to continue as federal credit unions, and emerging banking models, such as fintechs and crypto custodians, as detailed in our bulletin: Financial Services Regulatory Updates: Streamlined Bank Applications and Much More.
OSFI’s proposed timeline is 12 months for its formal review of eligible applications, excluding steps outside of OSFI’s control, which is significantly shorter than those seen in recent years. It will also aim to issue a bank license within three months of Ministerial approval, with conditions or restrictions as required. To promote transparency, OSFI plans to have a public dashboard to detail applicants’ status once the program launches.
The pilot program represents a significant opportunity for fintechs and provincial credit unions aiming to establish a bank or federal credit union.
Liquidity and Capital Concentration Risks
OSFI has launched multiple consultations on several guidelines that relate to liquidity and capital requirements for banks. The majority of the proposed regulatory changes in this quarterly release are technical in nature.
Liquidity Adequacy Requirements Guideline
The draft Liquidity Adequacy Requirements (LAR) Guideline (2027) proposes several updates, which would introduce a new Level 1 High Quality Liquid Asset category by including: 1) covered bonds (with credit rating AA- or above, and minimum issuance size of C$750M) and 2) certain public sector entity debt, which lacks explicit government guarantee/sovereign rating treatment. The proposed changes would also clarify a Net Stable Funding Ratio (NSFR) treatment of client gold deposits and client margin.
Feedback is requested by July 20, 2026, with the final LAR Guideline expected in February 2027, to take effect in May 2027.
Internal Liquidity Adequacy Assessment Process Guideline
In addition to compliance with LAR Guideline regulatory minimums, banks are also expected to have an Internal Liquidity Adequacy Assessment Process (ILAAP) to monitor liquidity risk. After a detailed consultation in 2025, OSFI provided a draft ILAAP Guideline as part of its quarterly release. OSFI has requested feedback on the draft expectations, including the Pillar 2 risks and the following phased implementation approach:
- Foundational Elements (Phase 1, 2027): Expectations around governance, risk identification and measurement, data and models validation, controls, limits and buffers, and stress testing;
- Priority Pillar 2 Risks (Phase 2, 2028): Expectations around Pillar 2 risks, as prioritized by OSFI; and
- Remaining Pillar 2 Risks (Phase 3, 2029): Expectations for remaining Pillar 2 risks not covered in phase 2.
For each phase, ILAAP steps and assessments would be expected to be completed within 90 days of fiscal year end. OSFI also provided the proposed structure of the ILAAP submission for review. All feedback on the draft ILAAP Guideline is requested by August 19, 2026.
Guideline B-2: Large Exposure Limits
OSFI is proposing several updates to Guideline B-2: Large Exposure Limits to extend its scope to include the larger small and medium-sized banks (SMSBs). For Category 1 and 2 SMSBs, the draft guideline would:
- limit total exposures to a single counterparty or a group of connected counterparties to 25% of an institution's Tier 1 capital;
- measure exposures net of credit risk mitigation in line with capital requirements;
- require these SMSBs to establish and maintain robust processes to identify connected counterparties; and
- introduce quarterly reporting, using the same template as the largest banks.
The consultation on Guideline B-2 also runs until August 19, 2026. OSFI expects to publish the final guideline in February 2027, with implementation planned for November 1, 2027, for financial institutions with a fiscal year ending October 31, or January 1, 2028, for financial institutions with a fiscal year ending December 31. After the revisions come into force, Category 3 SMSBs and foreign bank branches will no longer be subject to the large exposure guideline.
Guideline for Capital and Liquidity Treatment for Crypto-asset Exposures
Minor changes are also proposed to the Guideline for Capital and Liquidity Treatment for Crypto-asset Exposures for banks, to treat all regulated exchanges of traditional financial assets (i.e., the TSX, NYSE) as a single exchange, so that offsetting positions are fully recognized for capital purposes. Feedback is requested by July 20, 2026.
Guideline B‑12: Interest Rate Risk Management
OSFI is also proposing various targeted adjustments to Guideline B‑12: Interest Rate Risk Management, to “ensure interest rate shock scenarios and methodologies stay current, risk‑sensitive, and aligned with international standards”. Amendments to the related Pillar 3 Disclosure Guidelines for Interest Rate Risk in the Banking Book (IRRBB) were also proposed by OSFI in its quarterly release. Comments on both draft guidelines are requested by July 20, 2026, with the final guidelines expected in September 2026, to take effect in 2027.
Other Updates
- OSFI and Canada Deposit Insurance Corporation published an updated Guide to Intervention for Federally Regulated Deposit-Taking Institutions on May 21, 2026. The revisions reflect OSFI's Supervisory Framework updates in 2024, and its expanded integrity and security mandate. Updates to the similar Guides to Intervention for the insurance sector are planned for 2027.
- Bill C-31 was tabled by the federal government on May 6, 2026, to implement various measures from the 2025 federal budget, including proposed amendments to the Bank Act to require an institution to offer deposit products in a non-discriminatory manner in circumstances to be prescribed by regulations, and amendments to the National Housing Act to increase CMHC’s total amount of outstanding guarantees that are in force.
- Finance Canada has launched a consultation on technical amendments to the Eligible Mortgage Loan Regulations and the Insurable Housing Loan Regulations, as part of its commitment to increase flexibility for mortgage insurers to offer products for multi-plex housing options. Feedback is requested by July 2, 2026.
- Finance Canada wrapped up its consultation on a National Anti-Fraud Strategy, as of April 28, 2026. Additional details on the new Financial Crimes Agency are expected in the coming months, once Bill C-29 is passed and in force.
- OSFI’s consultation on Credit Risk Management remains open for feedback until July 29, 2026. OSFI plans to consolidate its credit risk expectations into a single, principles-based guideline, including Guideline B-20: Residential Mortgage Underwriting Practices and Procedures. Draft segments of the new guideline will then be issued for further consultation, in a phased approach over 2026 and 2027.
- OSFI’s consultation on its expectations for senior leader accountability is also open for comment until October 31, 2026. OSFI will then issue draft guidance for further comment.
- The Bank of Canada has set up a Consumer-Driven Banking Advisory Committee to provide industry perspective and advice to the Bank of Canada and the Department of Finance. The committee will focus on topics such as implementation and industry readiness, as well as the supervisory framework for consumer-driven banking.
- Payments Canada’s membership is expanding rapidly, with its ongoing build of real-time payment rails. Fifteen organizations have joined Payments Canada so far in 2026, with more fintechs and financial innovators likely to follow later this year.
