Backgrounder: Final Liquidity Adequacy Requirements Guideline (2026)
Backgrounder -
Overview
The Office of the Superintendent of Financial Institutions (OSFI) published the final Liquidity Adequacy Requirements (LAR) Guideline for 2026. The guideline reflects feedback from a 60‑day public consultation that ended in July 2025.
The LAR Guideline sets out how OSFI monitors whether financial institutions can meet their obligations in cash or with assets that can be quickly converted to cash. It helps ensure federally regulated banks, bank holding companies, and trust and loan companies can handle deposit withdrawals and meet payment and settlement obligations even in periods of stress.
The final guideline clarifies which deposits can be classified as retail funding and qualify for favourable liquidity treatment. Partnership deposits are separated into smaller groups based on whether they are insured, whether they are in a transactional account, and whether they are part of an established relationship between the retail client and non-bank financial intermediary (NBFI). The two proposed categories of retail structured notes are combined into one, with liquidity treatment aligned with term deposits directly managed by an unaffiliated third party. The guideline also clarifies how to measure the maturity of structured notes with autocallable features and when contingent funding obligations should apply. Finally, it simplifies the definition of retail rate‑sensitive deposits.
Why it’s important
Liquidity is one of the biggest risks facing deposit-taking institutions as losses can occur when there is insufficient liquidity to handle a stress event. The final LAR Guideline (2026) reflects the innovation and evolution of financial markets while enhancing the financial resilience and stability of federally regulated deposit-taking institutions.
The final LAR Guideline (2026) sharpens deposit-taking institutions’ focus on one of the most important risks affecting their safety and soundness while considering regulatory burden and respecting the need for institutions to compete and take reasonable risks. Enhancements to OSFI’s liquidity regime continue to meet international standards agreed upon by the Basel Committee on Banking Supervision (BCBS).
Next steps
OSFI published the final LAR Guideline (2026) on January 29, 2026, and it will come into effect on May 1, 2026.