AI subject tested: Claude Sonnet 4.6 (web search on)
Question (paraphrased): A capital management team at a major CCP is preparing an annual LNAFE sufficiency review. Provide an internal policy note specifying what capital instruments qualify toward LNAFE under PFMI Principle 15 Key Consideration 3, what must be held separately, and whether equity already held in compliance with international risk-based capital standards such as Basel or CRD frameworks can be counted toward LNAFE or must be held on top.
AI response:
"KC3 of PFMI Principle 15 does NOT include any carve-out or exception for equity held under international risk-based capital standards such as Basel CET1. KC3 is the segregation requirement, not the equity-type or asset-quality provision."
Regulator verbatim text:
"However, equity held under international risk-based capital standards can be included where relevant and appropriate to avoid duplicate capital requirements."
Failure mode: inference_drift
Substrate document: p_03_NOTICE_d228_Annex_A_reproducing_PFMI_Principle_p251107.htm
This finding documents a confirmed hallucination by Claude Sonnet 4.6 (web search on) on a probe of the regulation. The model's response was tested against the regulator's verbatim primary text and classified as inference_drift. Full per-finding context is available via the linked Citation ID.
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). "A capital management team at a major CCP is preparing an annual LNAFE sufficiency review — AI Labs." Citation ID: RLB-H-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q002-Sonnet46. RegLegBrief AI Hallucination Research, published 2026-06-07. https://reglegbrief.com/regulators/j1/int/bis-cpmi/cpmi-iosco-pfmi-l3-general-business-risk-2025/whitepaper/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-002--sonnet-46-websearch/
RegLeg Specialist Panel. (2026). A capital management team at a major CCP is preparing an annual LNAFE sufficiency review [Hallucination finding RLB-H-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q002-Sonnet46]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/regulators/j1/int/bis-cpmi/cpmi-iosco-pfmi-l3-general-business-risk-2025/whitepaper/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-002--sonnet-46-websearch/
RegLeg Specialist Panel, A capital management team at a major CCP is preparing an annual LNAFE sufficiency review [RLB-H-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q002-Sonnet46], RegLegBrief AI Hallucination Research (June 07, 2026), https://reglegbrief.com/regulators/j1/int/bis-cpmi/cpmi-iosco-pfmi-l3-general-business-risk-2025/whitepaper/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-002--sonnet-46-websearch/.
@misc{reglegbrief_RLB_H_INT_BIS_CPMI_IOSCO_PFMI_L3_GENERAL_BUSINESS_RISK_2025_Q002_Sonnet46,
author = {RegLeg Specialist Panel},
title = {A capital management team at a major CCP is preparing an annual LNAFE sufficiency review},
year = {2026},
publisher = {RegLegBrief AI Hallucination Research},
note = {Hallucination finding Citation ID: RLB-H-INT-BIS-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-Q002-Sonnet46},
url = {https://reglegbrief.com/regulators/j1/int/bis-cpmi/cpmi-iosco-pfmi-l3-general-business-risk-2025/whitepaper/finding/INT-BIS-CPMI-INT-001-CPMI-IOSCO-PFMI-L3-GENERAL-BUSINESS-RISK-2025-v1-002--sonnet-46-websearch/}
}
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.