A head of liquidity risk at a major derivatives CCP wants a briefing covering the PFMI Principle 15 requirements for liquid net assets funded by equity, the minimum level, how it is calculated, and what qualifies, together with what the November 2025 CPMI-IOSCO assessment found about FMI compliance with this standard, and what changes the FIA and ISDA proposed in their response to the associated CPMI-IOSCO consultation.
The model located the correct quantitative threshold but attributed it to Key Consideration 2 instead of Key Consideration 3. The error is a cross-reference mis-assignment, the model's description of KC2's function ("potential general business losses") is drawn from the correct Key Consideration, but when it located the six-month floor it attached it to the wrong KC number. For a compliance team using this response to draft internal policy, the mis-assignment directs them to review and cite the wrong provision of the PFMI framework, with material consequences for regulatory engagement accuracy.
The model also cited a third-party regulatory commentary source as a basis for this section of its response.
This failure implicates the model's cross-reference resolution within the PFMI Principle 15 Key Consideration list: the correct threshold was located but attributed to KC2 instead of KC3. The subsystem gap is structured-document KC-number-to-provision linkage in training data — the model's Annex A representation does not reliably bind specific quantitative requirements to their correct KC identifier. The Pretextual citation (third-party commentary) used as a sourcing basis for this section of the response compounds the error.
A head of liquidity risk at a major derivatives CCP wants a briefing covering the PFMI Principle 15 requirements for liquid net assets funded by equity, the minimum level, how it is calculated, and what qualifies, together with what the November 2025 CPMI-IOSCO assessment found about FMI compliance with this standard, and what changes the FIA and ISDA proposed in their response to the associated CPMI-IOSCO consultation.
The model located the correct quantitative threshold but attributed it to Key Consideration 2 instead of Key Consideration 3. The error is a cross-reference mis-assignment, the model's description of KC2's function ("potential general business losses") is drawn from the correct Key Consideration, but when it located the six-month floor it attached it to the wrong KC number. For a compliance team using this response to draft internal policy, the mis-assignment directs them to review and cite the wrong provision of the PFMI framework, with material consequences for regulatory engagement accuracy.
The model also cited a third-party regulatory commentary source as a basis for this section of its response.
This failure implicates the model's cross-reference resolution within the PFMI Principle 15 Key Consideration list: the correct threshold was located but attributed to KC2 instead of KC3. The subsystem gap is structured-document KC-number-to-provision linkage in training data — the model's Annex A representation does not reliably bind specific quantitative requirements to their correct KC identifier. The Pretextual citation (third-party commentary) used as a sourcing basis for this section of the response compounds the error.
AI tools that place the six-month LNAFE floor in KC2, rather than KC3, produce a capital policy that discusses the quantitative minimum in the wrong conceptual context, treating it as part of the scenario-analysis sizing exercise rather than as a separate standalone floor. A Compliance drafter relying on this characterisation produces documentation that misrepresents the KC structure in any regulatory submission or internal audit deliverable. This finding also involved a secondary source being cited as supporting the AI's incorrect position, which makes the error harder to catch in internal review: the drafter believes the characterisation is externally corroborated.
CPMI-IOSCO or a national supervisor reviewing the framework would identify immediately that KC3's floor is being attributed to the wrong provision.
Each finding has a stable Citation ID (RLB-F-… for aggregated case-study findings, RLB-H-… for raw per-model hallucinations) — like a DOI, the ID always resolves to the canonical finding even if URLs change.
RegLeg Specialist Panel (2026). "Finding#2, Six-month LNAFE floor misattributed to KC2 — Payment Institutions × Compliance — International / Multilateral." Citation ID: RLB-F-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q003. RegLegBrief AI Hallucination Research, published 2026-06-11. https://reglegbrief.com/regulators/j1/INT/BIS-CPMI/CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025/sectors/payment_institutions/compliance/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-003/
RegLeg Specialist Panel. (2026). Finding#2, Six-month LNAFE floor misattributed to KC2 [Hallucination finding RLB-F-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q003]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/regulators/j1/INT/BIS-CPMI/CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025/sectors/payment_institutions/compliance/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-003/
RegLeg Specialist Panel, Finding#2, Six-month LNAFE floor misattributed to KC2 [RLB-F-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q003], RegLegBrief AI Hallucination Research (June 11, 2026), https://reglegbrief.com/regulators/j1/INT/BIS-CPMI/CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025/sectors/payment_institutions/compliance/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-003/.
@misc{reglegbrief_RLB_F_INT_BIS_CPMI_IOSCO_PFMI_L3_GENERAL_BUSINESS_RISK_2025_Q003,
author = {RegLeg Specialist Panel},
title = {Finding#2, Six-month LNAFE floor misattributed to KC2},
year = {2026},
publisher = {RegLegBrief AI Hallucination Research},
note = {Hallucination finding Citation ID: RLB-F-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q003},
url = {https://reglegbrief.com/regulators/j1/INT/BIS-CPMI/CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025/sectors/payment_institutions/compliance/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-003/}
}
Every finding on this page compares an AI subject's account of the rule against the regulator's verbatim text from the regulator's own portal. Both are linked. Each delta, its root causes, and impact analysis are documented and published with immutable Citation IDs.