A&O Shearman | FinReg

ESMA peer review on implementation of STS securitisation requirements

27 March 2025

The European Securities and Markets Authority (ESMA) has published its peer review report on national competent authorities' (NCAs) supervision of simple, transparent and standardised (STS) securitisations. The report looks into and provides recommendations on the supervisory approaches adopted by selected NCAs when supervising STS securitisation transactions and the activities of their originators, sponsors and securitisation special purpose entities. The Peer Review Committee recommends relevant NCAs scale up their approach to STS supervision, so that risks arising from these transactions are adequately identified, assessed and addressed. NCAs are encouraged to continue monitoring the evolution of their STS markets and to adapt their supervisory approach and resource allocation as needed. This is said to be particularly relevant in light of the ongoing fundamental review of the securitisation regulatory framework, with the aim to revive the securitisation market in the EU. ESMA expects to carry out a follow-up assessment in the future to evaluate progress made against the recommendations and track developments in STS supervision across jurisdictions.

Topic : Securities

FSB forum on cross-border payments data

27 March 2025

The Financial Stability Board (FSB) has announced the establishment of a forum on cross-border payments data, a key outcome from the FSB's recommendations for data frameworks related to cross-border payments published in December 2024. The forum seeks to bring together experts in payments, anti-money laundering and countering terrorist financing, sanctions and data privacy and protection, to strengthen cooperation on data-related issues in cross-border payments. Working with international organisations, including with the Financial Action Task Force (FATF) and the Organisation for Economic Cooperation and Development (OECD), the forum will serve as a platform for dialogue, information exchange and research, helping to identify and address inconsistencies in global data frameworks. An advisory body comprised of private sector representatives will also be created to provide industry perspectives and expertise to the forum. Its first meeting will be held in May.

Topic : Payment Services and Payment Systems

European Commission calls on Member States to fully transpose EU DORA Directive

27 March 2025

The European Commission (EC) has announced that it has opened infringement procedures by sending a letter of formal notice to 13 Member States (Belgium, Bulgaria, Denmark, Greece, Spain, France, Latvia, Lithuania, Malta, Poland, Portugal, Romania and Slovenia) for failing to fully transpose the Digital Operational Resilience Act Directive (Directive 2022/2556) (DORA Directive). Member States had to transpose the DORA Directive into national law by 17 January. The Member States concerned now have two months to respond and to complete their transposition and notify their measures to the EC. In the absence of a satisfactory response, the EC may decide to issue a reasoned opinion, the second stage of the formal infringement procedure.

Topic : Operational Resilience

UK regulators consult on changes to margin requirements for non-centrally cleared derivatives

27 March 2025

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have opened a consultation on margin requirements for non-centrally cleared derivatives. The proposals are to:

Make permanent the current temporary exemption, which is due to expire 4 January 2026, for single-stock equity options and index options from the UK bilateral margining requirements. The EU had the same temporary exemption until 24 December 2024 when the latest revisions to the European Market Infrastructure Regulation, known as EMIR 3, made the exemption permanent. We discuss this change and others in our client bulletin, "EMIR 3 - Impact on uncleared OTC derivatives markets". Both the UK and EU allow provision for the exemptions to change, if in future other jurisdictions implement margin requirements for these derivatives.

Topic : Derivatives

Changes to UK Code of Broadcast Advertising relating to unregulated investments

26 March 2025

The Broadcast Committee of Advertising Practice (BCAP), author of the UK Code of Broadcast Advertising (the BCAP Code), has announced that following a consultation, it was introducing changes to Section 14 of the BCAP Code (Financial products, services and investments) to clarify the scope of its restriction of advertisements (ads) for unregulated investments to specialised financial channels and programming. The BCAP Code includes a rule that restricts ads for certain types of complex financial products to specialised financial channels, stations and programming, meaning that such ads cannot be broadcast on mainstream TV or radio to a general audience. The amendment is intended to clarify the scope of the existing restriction on ads for investments unregulated by the FCA, to ensure that it applies in practice to unregulated "investments" that meet the likely consumer understanding of that term. It will remove the risk of what is seen as an inadvertent application of the restriction to unregulated products that technically fall within the definition of investment activity set out within the Financial Services and Markets Act 2000 (as reflected in the Code section), but that are not in line with a layperson's understanding of an investment, and that are not compatible with the type of risky financial products from which restrictions were intended to protect general broadcast audiences. The changes take effect immediately, but BCAP are mindful of the need to avoid unintended consequences of amending the wording of rules and to ensure that changes are effective. As such, the amended rules will be subject to review after 12 months.

Topic : Consumer / Retail

EU Platform on Sustainable Finance response to Taxonomy Delegated Act consultation

26 March 2025

The Platform on Sustainable Finance, an advisory body to the European Commission (EC) established under Article 20 of the Taxonomy Regulation, has published its response to the EC's Taxonomy Delegated Act consultation.

The Platform is broadly supportive of the simplification proposal but makes a number of recommendations, including: (i) introducing a mechanism for all companies to report partial alignment; (ii) clarifying the materiality threshold; (iii) gradually integrating exposures into the Green Asset Ratio; (iv) postponement of KPIs for Banks; and (v) pausing, rather than excluding, reasonable assurance for Corporate Sustainability Reporting Directive (CSRD) reporting, including the EU Taxonomy entity-level reporting. The Platform raises concerns regarding the reduction of the Taxonomy's scope suggested in the Omnibus proposals, as regards certain corporate sustainability reporting and due diligence requirements. The Platform recommends aligning the scope of Taxonomy reporting with the scope of the CSRD, while preserving the CSRD's original scope. For non-SME companies below the 1,000-employee threshold, the Platform suggests that reporting should be focused on the most essential standards, including Taxonomy alignment.

Topic : Sustainable Finance

Omnibus proposals: Council of the EU agrees position on 'stop-the-clock' mechanism

26 March 2025

The Council of the EU has announced that it has agreed its position on the "stop-the-clock" mechanism to postpone the dates of application of certain corporate sustainability reporting and due diligence requirements, as well as the transposition deadline of the due diligence provisions. In particular, to postpone:

by two years the entry into application of the Corporate Sustainability Reporting Directive (CSRD) requirements for large companies that have not yet started reporting, as well as listed SMEs; and
by one year the transposition deadline and the first phase of the application (covering the largest companies) of the Corporate Sustainability Due Diligence Directive (CSDDD).This mechanism is intended to grant the co-legislators time to agree on substantive changes to the CSRD and CSDDD, also proposed by the Commission as part of the "Omnibus I" package on sustainability. The European Parliament has scheduled 1 April for a vote on this fast-tracked proposal.

Topic : Sustainable Finance

ESMA guidelines on suitability requirements and format of the periodic statement for portfolio management activities under MiCAR

26 March 2025

Official translations of the guidelines on certain aspects of the suitability requirements and format of the periodic statement for portfolio management activities under the EU Markets in Crypto Assets Regulation (MiCAR) have been published on the European Securities and Market Authority's (ESMA's) website. These guidelines apply to competent authorities and cryptoasset service providers (CASPs) where they provide advice on cryptoassets or portfolio management of cryptoassets. They specify the suitability requirements under Article 81(1), (7), (8), (10), (11) and (12) of MiCAR and the requirements applicable to the format of the periodic statement to be provided by CASPs in accordance with Article 81(14) of MiCAR. The guidelines apply from 25 May. Competent authorities must notify ESMA by 25 May whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the guidelines, with their reasons for not complying. Financial market participants are not required to report whether they comply with these guidelines.

Topic : FinTech

The UK FCA new five-year strategy

25 March 2025

The Financial Conduct Authority (FCA) has published its new five-year strategy, focusing on the following key priorities with the stated objectives of deepening trust and rebalancing risk, to support growth and improve lives:

to be a smarter regulator; predictable, purposeful and proportionate. The FCA will improve its processes and embrace technology to become more efficient and effective.
to support sustained economic growth, by enabling investment, innovation and ensuring the continued competitiveness of the UK's world-leading financial services.
to help consumers navigate their financial lives by working with industry to boost trust, product innovation and ensuring the right information and support is available for people to take financial decisions.
to fight financial crime, focusing on those who seek to use the fact they are regulated to do harm. It will go further to disrupt criminals and support firms to be an effective line of defence.

Each priority is accompanied by intended markers of success by 2030.

Topic : Other Developments

Bank of England discusses opportunities in innovating wholesale payments

25 March 2025

Victoria Cleland, Executive Director of Payments, Bank of England (BoE) has given a speech on innovating wholesale payments: building a resilient and innovative future. In the speech, Ms Cleland discusses the BoE's innovation work, including on tokenisation, synchronisation of foreign exchange between sterling and euro and developing a wholesale central bank digital currency. Ms Cleland highlights the BoE's work on enhancing access to the RTGS service. Before Easter, the FCA will publish a summary of the key feedback received on its February 2024 discussion paper, an update on work so far and its forward-looking policy work in this area. Market participants can expect in April the publication of an updated guide for non-bank payment service provider (NBPSP) access to UK payment systems. The Bank will also be considering offering safeguarding facilities directly to NBPSPs, so that NBPSPs could securely hold funds overnight and manage their liquidity and payment obligations. It is also working with HM Treasury and the Financial Conduct Authority on reforming the regulatory regime for NBPSPs to support their RTGS access. The BoE will also soon be publishing updated information on access to RTGS to give more details on benefits, costs and processes, including for foreign banks. The Bank intends to continue engaging with industry on assessing the appropriateness of the CHAPS direct participation threshold. Additionally, given the value of a consistent adoption of the ISO 20022 global messaging standard, the BoE will mandate the use of ISO 20022 enhanced data for certain CHAPS payments from 1 May, including the use of Legal Entity Identifiers for payments between financial institutions.

Topic : Payment Services and Payment Systems

FCA feedback statement on rule review in response to consumer duty

25 March 2025

The Financial Conduct Authority (FCA) has published a feedback statement on immediate areas for action and further plans for reviewing FCA requirements following introduction of the Consumer Duty. It follows the FCA's call for input to which it received 172 responses. Most respondents supported simplification of requirements in principle, but opinions varied on the approach and timeline.

Read more.

Topic : Consumer / Retail

Council of the EU adopts financial benchmarks regulation

24 March 2025

The Council of the EU has announced that it has adopted at first reading the financial benchmarks regulation with the aim of reducing red tape for EU companies, particularly SMEs. The regulation amends the Benchmark Regulation (Regulation 2016/1011) (BMR) to reduce the regulatory burden on administrators of benchmarks defined as non-significant by removing them from the scope of the legislation. Critical or significant benchmarks will remain within the scope of the revised BMR. EU administrators that are out of scope will be able to opt-in, under certain conditions.

Additionally, the regulation will establish a revised framework for non-EU benchmark administrators to access the EU markets by, among other things, allowing for recognition without requiring equivalence. The European Securities and Markets Authority (ESMA) is granted supervisory powers over non-EU benchmark administrators, aligning ESMA's oversight across both the recognition and endorsement regimes.

Read more.

Topics : Securities, Sustainable Finance

Bank of England 2025 bank capital stress test launched

24 March 2025

The Bank of England (BoE) has launched the 2025 bank capital stress test for the seven largest and most systemic UK banks and building societies. The exercise is the successor to the Annual Cyclical Scenario. The test involves a hypothetical stress scenario which will be used to assess the resilience of the UK banking system to deep simultaneous recessions in the UK and global economies, large falls in asset prices, higher global interest rates and a stressed level of misconduct costs. The stress scenario is not a forecast of macroeconomic and financial conditions. Rather, like previous concurrent stress test scenarios, it is intended to be a coherent "tail risk" scenario designed to be severe and broad enough to allow the Financial Policy Committee and Prudential Regulation Committee to assess the resilience of UK banks to a range of adverse shocks. The 2025 Bank Capital Stress Test has three elements, which include a macroeconomic scenario, a financial markets and traded risk scenario and a misconduct stress. The macroeconomic scenario involves a severe global aggregate supply shock leading to deep recessions in the UK and globally. The BoE also published key elements of the stress test. The results will be published at an aggregate and individual bank level in Q4. The results will be used to inform the setting of capital buffers for the UK banking system and individual participating banks, and to inform a broader understanding of risks in the banking system.

Topic : Prudential Regulation

European Commission targeted consultation on the application of the markets risk prudential framework

24 March 2025

The European Commission (EC) has launched a consultation to help determine the best approach for the application of the EU's framework on market risk prudential requirements for banks, with an accompanying press release. Last year, the Commission postponed by one year (until 1 January 2026) the date of fundamental review of the trading book (FRTB) application in the EU, in order to align implementation with other major global jurisdictions. Recent international developments indicate further possible delays in these jurisdictions, raising concerns on the international level playing field and the impact on EU banks. In this context, the EC is consulting on possible action within its mandate under Article 461a of the capital requirements regulation around three potential options: (i) implementing the FRTB as currently laid down in the Banking package, from 1 January 2026; (ii) postponing the date of application by a further year (1 January 2027); or (iii) introducing temporary and targeted amendments to the market risk framework for up to three years. A list of possible temporary amendments is set out in the annex to the consultation. Combinations of the options or other alternatives could also be envisaged provided they are within the EC's mandate. Interested parties are invited to submit their contributions by 22 April. The EC is empowered under Article 461a to adopt a Delegated Regulation by the end of June.

Topic : Prudential Regulation

European Commission adopts RTS on the elements to assess when subcontracting certain ICT services under DORA

24 March 2025

The European Commission has adopted a Delegated Regulation supplementing Regulation 2022/2554 on digital operational resilience for the financial sector (DORA) with regard to regulatory technical standards specifying the elements that a financial entity has to determine and assess when subcontracting ICT services supporting critical or important functions. Articles 1 and 2 establish the rules on proportionality and group application. Article 3 sets out rules on due diligence and risk assessment regarding the use of subcontractors supporting critical or important functions. Article 4 establishes the description and the conditions under which ICT services supporting a critical or important function may be subcontracted. Articles 5 and 6 contain the rules on material changes to subcontracting arrangements of ICT service supporting critical or important functions and the provisions on the termination of the contractual arrangement. The Delegated Regulation will enter into force 20 days after its publication in the Official Journal of the EU.

Topic : Operational Resilience

RTS on criteria for the composition of joint examination teams under EU DORA published in OJ

24 March 2025

Commission Delegated Regulation 2025/420 has been published in the Official Journal of the EU. This Delegated Regulation supplements Regulation 2022/2554 on digital operational resilience for the financial sector (DORA) with regard to regulatory technical standards (RTS) to specify the criteria for determining the composition of the joint examination team ensuring a balanced participation of staff members from the European Supervisory Authorities and from the relevant competent authorities, their designation, tasks and working arrangements. The Delegated Regulation will enter into force on 13 April.

Topic : Operational Resilience

UK FCA voluntary survey of ESG ratings providers

24 March 2025

The Financial Conduct Authority (FCA) has published a new webpage on a voluntary survey it issued to environmental, social and governance (ESG) ratings providers on 21 March, to help inform the future regulation of ESG ratings and broader sustainability disclosures. This follows a survey in November 2024 open to all who may be users of ESG ratings and sustainability disclosures. The FCA explains that the input from this survey will inform its cost benefit analysis, policy development and help ensure that the future regulation is both proportionate and tailored to the needs of the market. The information requested to help the FCA better understand the ESG ratings market, includes: (i) the business models and group structures used to provide ESG ratings; (ii) how ESG ratings are constructed and distributed: (iii) what policies and processes firms have in place; and (iv) how firms interact with the broader sustainability disclosures. The FCA is encouraging firms to respond by 2 May but no later than 16 May.

Topic : Sustainable Finance

Suite of regulatory technical standards supplementing MiCAR published in OJ

24 March 2025

Four Commission Delegated Regulations supplementing Regulation 2023/1114 (MiCAR) have been published in the Official Journal of the EU, namely:

Commission Delegated Regulation - 2025/415 supplementing the EU Markets in Crypto Assets Regulation (MiCAR) with regard to regulatory technical standards specifying adjustment of own funds requirement and minimum features of stress-testing programmes of issuers of asset-referenced tokens or of e-money tokens.
Commission Delegated Regulation - 2025/418 supplementing MiCAR with regard to regulatory technical standards specifying the minimum content of the governance arrangements on the remuneration policy of issuers of significant asset-referenced or e-money tokens.
Commission Delegated Regulation - 2025/419 supplementing MiCAR with regard to regulatory technical standards specifying the procedure and timeframe for an issuer of asset-referenced tokens or of e-money tokens to adjust the amount of its own funds.
Commission Delegated Regulation - 2025/421 supplementing MiCAR with regard to regulatory technical standards specifying the data necessary for the classification of crypto-asset white papers and the practical arrangements to ensure that such data is machine-readable.

Each of these delegated regulations will enter into force on 13 April.

Topic : FinTech

EU Platform on Sustainable Finance report: Streamlining sustainable finance for SMEs

21 March 2025

The Platform on Sustainable Finance, an advisory body to the European Commission (EC) established under Article 20 of the Taxonomy Regulation, has published a report on streamlining sustainable finance for SMEs. Despite the critical role that SMEs play in the transition to a net zero, resilient and environmentally sustainable economy, SMEs face significant challenges in accessing external financing for their sustainability efforts. To address the challenges faced by SMEs in relation to use of the Taxonomy, the Platform proposes a tailored streamlined approach – "the SME sustainable finance standard" – to be used by banks and other financiers to classify the loans or other type of financing they provide to SMEs as sustainable (green or transition) finance and simplify any related voluntary reporting.

Read more.

Topic : Sustainable Finance

ESMA guidelines on the conditions and criteria for the qualification of cryptoassets as financial instruments

19 March 2025

The European Securities and Markets Authority (ESMA) has published official translations of its guidelines on the conditions and criteria for the qualification of cryptoassets as financial instruments under Article 2(5) of the Markets in Cryptoassets Regulation (MiCAR). The guidelines will now apply from 18 May to competent authorities and financial market participants including issuers, offerors, cryptoasset service providers, investors and all persons engaging in activities relating to cryptoassets. National competent authorities must notify ESMA whether they comply, do not comply but intend to comply, or do not intend to comply with the joint guidelines by 18 May. Financial market participants are not required to report whether they comply.

Topic : FinTech

European Commission communication on the Savings and Investments Union

19 March 2025

The European Commission has unveiled its strategy for the Savings and Investments Union (SIU), an initiative to improve the way the EU financial system channels savings to productive investments. Alongside the communication, the Commission also published an accompanying press release and questions and answers. A factsheet includes a summary timetable for key proposed measures. In Q2 2027, the Commission will publish a mid-term review of the overall progress in achieving the Savings and Investments Union.

Implementing the SIU requires a range of policy measures, which are grouped under four headings:

Citizens and savings—encouraging and incentivising retail customers to hold more of their savings in capital market instruments.
Investments and financing—promoting investment in equity and certain alternative assets, namely venture capital, private equity and infrastructure.
Integration and Scale—removing sources of fragmentation in EU capital markets, whether regulatory, supervisory or political, to allow for the possibility of market-driven consolidation.
Efficient Supervision in the Single Market—harmonised supervision is an objective of the SIU. All financial market operators should receive the same supervisory treatment irrespective of their location across the Union.

Topic : FinTech

UK moves to permanently exempt UK and EEA pension schemes from the derivatives clearing obligation

18 March 2025

A draft of the Pension Fund Clearing Obligation Exemption (Amendment) Regulations 2025 has been published alongside an explanatory memorandum. The draft Regulations will amend the UK European Market Infrastructure Regulation (EMIR) to make permanent the temporary exemption from the derivatives clearing obligation for UK and EEA pension scheme arrangements. The temporary exemption is due to expire on 18 June. The draft Regulations will come into force on the day after they are made. The EU EMIR was recently amended by EMIR 3 to provide a permanent exemption from the clearing obligation where a counterparty trades with a non-EU pension scheme arrangement, subject to certain conditions being met.

Topic : Derivatives

Global alert portal launched to help reduce retail investment fraud

18 March 2025

The International Organization of Securities Commissions (IOSCO) has announced the launch of a new alert portal, which is aimed at strengthening the global fight against retail investment fraud. The International Securities & Commodities Alerts Network (I-SCAN) allows investors, online platform providers, banks and institutions to check if a financial regulator has a suspicious activity flag for a particular company or potential investment. I-SCAN is part of IOSCO's roadmap for retail investor online safety, which sets strategic initiatives for safeguarding retail investors worldwide from fraud, excessive risk and misinformation as digital trading and social media reshape the retail financial market.

Topics : Consumer / Retail, Financial Crime and Sanctions

EU DORA guidelines on estimation of costs of major ICT-related incidents published

18 March 2025

Translations have been published of the joint guidelines on the estimation of aggregated annual costs and losses caused by major ICT-related incidents. The guidelines supplement the EU Digital Operational Resilience Act (DORA) which requires that financial entities report on request to their national competent authorities an estimation of aggregated annual costs and losses caused by major ICT-related incidents. The guidelines indicate how those estimations should be arrived at and include a related reporting template. The guidelines will apply from 19 May.

Topic : Operational Resilience

UK HMT publishes draft SI on UK MiFID Org Reg

18 March 2025

HM Treasury (HMT) has published a new webpage with a draft statutory instrument (SI) and policy note on the UK Markets in Financial Instruments Directive Organisational Regulation (UK MiFID Org Reg). The draft SI does not seek to make any policy changes but restates definitions from the UK MiFID Org Reg in UK domestic legislation and makes various consequential changes. The publication of the draft SI follows the UK chancellor's announcement last year of further changes to the UK wholesale markets regulatory framework, which will include the revocation of firm-facing rules within the MiFID Org Reg. These will be replaced in the UK Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) rulebooks. The deadline for comments on the draft SI is 14 April. HMT will then proceed with the restatement of UK MiFID Org Reg definitions, and the revocation of firm-facing rules, to align with the FCA and PRA implementing the new rules in H2 2025.

Topic : MiFID II

UK FCA call for evidence on interest rate 'stress test' rule for mortgage lenders

17 March 2025

The UK's Financial Conduct Authority (FCA) has updated its webpage on the interest rate 'stress test' rule for mortgage lenders, and issued a call for evidence on the impact of the FCA handbook rule on considering the effect of future interest rate rises in the context of mortgage lender affordability assessments. The rule, MCOB 11.6.18R, requires mortgage lenders, when assessing affordability in accordance with MCOB 11.6.5, to take into account the impact of likely future interest rate increases on affordability for at least five years, except in the case of contracts of less than five years (in which case the duration of the contract should be used) and in the case of contracts which have a fixed interest rate for an initial period for at least five years. The rule does not prescribe a specific rate that lenders should use for testing affordability, but does require lenders to assume that interest rates will rise by a minimum of 1% over the first five years. The rule is being reviewed as part of the broader review of the mortgage rules which follows the FCA's letter of 16 January to the UK prime minister, confirming (among other things) that it would simplify responsible lending and advice rules for mortgages. The deadline for responses is 11 April.

Topic : Consumer / Retail

European Parliament draft report on facilitating the financing of investments and reforms to boost European competitiveness and create Capital Markets Union

17 March 2025

The European Parliament Committee on Economic and Monetary Affairs has published a draft report (dated 12 March) on facilitating investments and reforms to boost European competitiveness and creating a Capital Markets Union. The report identifies challenges facing the EU, including the risk of economic decline and its perceived inability to protect itself from territorial threats highlighted by the Russia-Ukraine war as well as the strategic realignment of the U.S. The EU is therefore exploring ways to improve its budgetary headroom and mobilise private capital for investment to provide financing for defence capacities, while continuing to support the green reindustrialisation and to invest in education and research. It is noted that businesses are turning outside the EU to gain access to finance and resources and often scale up in foreign markets.

Read more.

Topic : Other Developments

UK Treasury policy paper on new approach to ensure regulators and regulation support growth

17 March 2025

HM Treasury has published a policy paper setting out the next steps to its approach on regulation and regulators. The three overarching actions are: (i) tackling complexity and the burden of regulation; (ii) reducing uncertainty across the regulatory system; and (iii) challenging and shifting excessive risk aversion in the system. While the paper covers a range of sectors, in the context of financial services, specific actions include plans already announced, such as consolidating the payment systems regulator with the Financial Conduct Authority (FCA). It also builds upon the announcements of the Chancellor at Mansion House, including the drive to modernise the FCA's rules for dispute resolution with plans to examine whether the Financial Ombudsman Service (FOS) is delivering its role as a simple, impartial dispute resolution service set up in a way which works well for consumers, small businesses and for financial services firms. This review of the FOS is expected to conclude by the summer.

Read more.

Topic : Regulatory Reform Post Brexit

SRB consultation on operational guidance on resolvability testing for banks

17 March 2025

The Single Resolution Board (SRB) has opened a consultation on its operational guidance on resolvability testing for banks under the SRB's remit. It aims to ensure that European banks are regularly testing their capabilities to handle a crisis and to implement a resolution action, and promote a harmonised approach for the implementation of the multi-annual testing programme. With reference to the European Banking Authority's guidelines on improving resolvability, it defines testing areas and sub-areas, testing methods, as well as expectations for testing governance, design, preparation and reporting. The multi-annual testing programme will define the testing exercises banks will conduct over a three-year period, with an annual review to incorporate developments from the previous year. A natural feedback loop exists between resolvability assessment and testing: resolvability assessment outcomes will shape testing priorities, while testing results will validate operational effectiveness and inform future resolvability assessments. The consultation incorporates lessons learned from past crises and best practice. The deadline for submitting feedback is 5 May. The SRB expects to publish final guidance in Q3.

Topic : Recovery and Resolution

EBA final report on amendments to ITS on internal model authorisations under CRR

17 March 2025

The European Banking Authority has published its final draft implementing technical standards (ITS) amending the existing implementing regulation on the joint decision process for internal model authorisation under Articles 143(1), 151(9), 283 and 325az of the Capital Requirements Regulation (CRR). This final draft amending ITS is part of the first phase of the EBA roadmap for implementing the EU Banking Package. The key amendments include:

A revised scope for the use of internal models for regulatory purposes under CRR III, where the possibility of applying these models for operational risk has been removed. As a result, references to the Advanced Measurement Approach (AMA) have been deleted from the scope of the revised ITS.
Updated references to the ITS and regulatory technical standards (RTS) on the functioning of supervisory colleges, reflecting changes in the revised supervisory colleges regulatory framework.

The draft ITS will be submitted to the Commission for endorsement following which the ITS will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the EU.

Topic : Prudential Regulation

EU recognition of UK CCPs extended

17 March 2025

Following the extension of EU equivalence for UK CCPs to 30 June 2028 under the EU European Market Infrastructure Regulation (EMIR), on 17 March, the European Securities and Markets Authority (ESMA) announced the extension of the tiering and recognition of the three UK CCPs: ICE Clear Europe, LCH Ltd and LME Clear. The Bank of England published a press release on the same day welcoming ESMA's decision to ensure that EU market participants can continue to access the clearing services of the UK CCPs. In addition, ESMA and the Bank have agreed an amended Memorandum of Understanding governing cooperation and information sharing regarding UK CCPs, which take account of the changes brought in by EMIR 3.

Topics : Derivatives, Financial Market Infrastructure

EU MiCAR regulatory technical standards on order book records and transparency data requirements for CASPs

14 March 2025

The following two delegated regulations made under Article 76(16) of Markets in Cryptoassets Regulation (MiCAR) have been published in the Official Journal of the European Union:

Commission Delegated Regulation (EU) 2025/416 of 29 November 2024 on regulatory technical standards (RTS) specifying the content and format of order book records for cryptoasset service providers (CASPs) operating a trading platform for cryptoassets. The RTS set out in Articles 2 to 15 the details of each order in cryptoassets advertised through a CASP's systems the relevant CASP is required to keep at the disposal of the competent authority, or give the competent authority access to, in the format laid down in Tables 2 and 3 of the Annex.
Commission Delegated Regulation (EU) 2025/417 of 28 November 2024 supplementing MiCAR with regard to RTS specifying the manner in which CASPs operating a trading platform for cryptoassets are to present transparency data. The RTS specify the general principles of presentation of the information on operating rules for trading platforms, pre- and post-trade transparency requirements, real time publication of transactions, and disaggregation of pre- and post-trade data requirements.

Both delegated regulations will enter into force on 3 April.

Topic : FinTech

The Economic Crime and Corporate Transparency Act 2023 (Commencement No.4) Regulations

14 March 2025

The fourth commencement regulations made under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) have been published. Regulation 2 brought into force on 18 March certain provisions in Parts 1 and 2 of the Act. Regulation 3 brings measures creating the new offence of failing to prevent fraud fully into force in all of the United Kingdom on 1 September. Regulation 4 amends the third set of commencement regulations which failed to comply with the requirement that guidance must be published before regulations bringing section 199 (failure to prevent fraud) of the Act into force are made. Guidance was published on 6 November 2024, the day after the third commencement regulations were made. Regulation 5 replaces references in certain regulations to the commencement of a provision with a reference to the actual date on which the provision came into force. The explanatory note also contains a table listing provisions of the ECCTA which have been brought into force by previous commencement regulations.

Topic : Financial Crime and Sanctions

UK FCA Primary Market Bulletin 54

14 March 2025

The Financial Conduct Authority (FCA) has published its Primary Market Bulletin 54 in which it discusses strategic leaks and unlawful disclosure. The FCA reports that it has seen an increase in instances where material information on live M&A transactions appears to have been deliberately leaked to the press. The FCA reminds issuers and advisers of best practice in mitigating unlawful disclosure and limiting market abuse as set out in Primary Market Bulletin 42, Primary Market Bulletin 52, Article 14 of the Market Abuse Regulation and Rule 2.1(a) of the Takeover Code. Anyone unlawfully disclosing inside information, deliberately or otherwise, risks being investigated for market abuse. The FCA stresses that written policies and procedures for identifying and handling inside information can have limited effectiveness if they are not accompanied by culture and practices which actively discourage leaks.

Topic : Financial Crime and Sanctions

ESMA statement on treatment of settlement fails following incident affecting T2S and T2 in February 2025

14 March 2025

The European Securities and Markets Authority (ESMA) has published a statement confirming that national competent authorities do not expect central securities depositories (CSDs) to impose cash penalties under the Central Securities Depositories Regulation for settlement fails in EEA CSDs that occurred on 27 and 28 February 2025, in the wake of the T2S and T2 incident on 27 February. The incident meant that no settlement instructions, payment, ancillary system instructions or liquidity transfers between TARGET services could be processed for a number of hours. The incident had significant knock-on effects on the total number and value of settlement fails. Given this was a failure of infrastructure (which was a circumstance independent of the involved participants), it would not be justified to impose cash penalties.

Topic : Securities

EBA consultation on draft RTS on the threshold for prudential risk management requirements under CSDR

14 March 2025

The European Banking Authority has published a consultation on draft Regulatory Technical Standards (RTS) on the threshold of activity at which designated credit institutions and Central Securities Depositories (CSDs) providing 'banking-type ancillary services' to a designating CSD need to meet the prudential risk management requirements set out in Articles 54(4) and 54(4a) of the Central Securities Depositories Regulation (CSDR), together with an accompanying press release. Banking-type ancillary services include activities such as providing cash accounts to, and accepting deposits from, participants in a securities settlement system, and payment services involving processing of cash and foreign exchange transactions.

Article 1 of the draft RTS prescribes a formula to determine the threshold which takes into account: (i) the liquidity of the currencies for which commercial bank money (CoBM) settlement is offered; (ii) the number of settlement agents providing CoBM settlement to the designating CSD; (iii) the other roles that the settlement agents may have vis-à-vis the designating CSD (e.g., participants to the securities settlement systems); and (iv) the creditworthiness of the settlement agents. Depending on the liquidity of the currencies and on the characteristics of the settlement agents, the threshold can range from a minimum of 1.5% of the total value of all securities transactions against cash settled in the books of the CSD, calculated over a one-year period, and EUR3.75 bn, to a maximum of 2.5% and EUR6.25bn.

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Topic : Securities

UK FCA engagement paper on contactless payments limits

14 March 2025

The UK Financial Conduct Authority (FCA) has published an engagement paper which seeks views on increasing or removing the current £100 contactless limit, giving payment service providers (PSPs), consumers and businesses greater flexibility to decide limits that work for them. The FCA is engaging stakeholders before consulting on any revised standards, rules or guidance. Given the regulatory and market trends happening around contactless payments, the FCA is considering several options for amending its existing standards for contactless limits: (i) Introducing a new risk-based exemption for in-person transactions which would give PSPs greater flexibility to set their own contactless limits for in-person transactions as long as they are able to achieve low rates of fraud; (ii) Amending the limits in the existing contactless payments exemption, including removing the limits altogether; and (iii) Relying on the consumer duty following legislative change.

The FCA notes that any changes would need to support good consumer outcomes as required by the consumer duty. The FCA is considering prioritising reforms to the contactless payments exemption under its existing regulatory framework before considering wider strong consumer authentication (SCA) requirements. It aims to replace SCA more widely, as and when legislation allows it to do so. With legislative change, other options for reform to contactless payments may be possible and the FCA is also interested to hear if there are alternative approaches which it might implement in the longer term when legislation allows. The paper poses eight specific questions for feedback, which is requested by 9 May.

Topic : Payment Services and Payment Systems

ESMA publishes overview of planned consultations for 2025

13 March 2025

The European Securities and Markets Authority has published an overview of its planned consultations for 2025. The consultations relate to workstreams under the EU Listing Act, the Markets in Financial Instruments package, the latest European Market Infrastructure Regulation (known as EMIR 3), the review of the Alternative Investment Fund Managers Directive, sustainable finance and investor protection. ESMA states that it will update the list regularly.

Topics : Financial Market Infrastructure, FinTech, Fund Regulation, Other Developments, Sustainable Finance

IOSCO publishes consultation report on neo-brokers

13 March 2025

The International Organization of Securities Commissions (IOSCO) has published a consultation report on neo-brokers, a subset of brokers which provide online-only investment services and do not operate physical branches. Neo-brokers rely on technology to facilitate their services, mainly providing access via mobile apps and websites, and have very limited or no human interaction with their retail customers. They have grown in recent years.

The consultation report sets out a series of findings from IOSCO members who reported on the activities of neo-brokers in their jurisdictions and also includes recommendations which member jurisdictions may consider applying. Two areas which require specific action are the potential risks of conflicts of interest, mainly due to business models inducing retail clients to trade more frequently and the need for solid IT infrastructure, given neo-brokers' online-only business models. The report lists a series of questions upon which feedback is welcomed, as well as any more general comments respondents may have on the proposed guidance in the report. Responses should be submitted on or before 12 May.

Topic : Securities

BCBS provides an update on upcoming workstreams

13 March 2025

The Basel Committee on Banking Supervision (BCBS) has published a press release providing an update on its workstreams. The BCBS states that it will publish by mid-2025 an update on the outcome of its work to prepare a suite of practical tools to support supervisors in their day-to-day work, taking into account the lessons learned from the 2023 banking turmoil. The BCBS has also committed to analysing recent developments and global practices on banks' information and communication technology risk management. The Committee plans to publish a range of practices report covering its findings in 2026. As part of the BCBS's work relating to non-bank financial intermediaries (NBFIs), the BCBS states that it will conduct a comprehensive investigation into the synthetic risk transfers from banks to NBFIs to provide an enhanced understanding of the risks and benefits of these products and the evolving nature of the transaction structures.

Topic : Prudential Regulation

FCA drops contentious proposals on enforcement publication

12 March 2025

The Financial Conduct Authority (FCA) has published a letter (dated 11 March) to the Treasury Select Committee providing an update on the FCA's approach to enforcement and diversity and inclusion proposals.

Following the FCA's second consultation on proposals for publication of enforcement measures, the FCA has decided not to proceed with all of its proposals. In particular, the FCA will not be publicising its investigations of firms at an earlier stage if there is a public interest. The FCA has taken this decision in response to the significant concerns raised by industry and the government. The FCA will be taking forward other proposed changes to its approach to enforcement, including reactively confirming investigations officially announced by firms or other regulators, issuing public notices on possible unlawful activities of unregulated and regulated firms, which should improve consumer protection, and publishing more detail of issues under investigation in anonymised form, potentially introducing an "Enforcement Watch" bulletin. The FCA intends to publish its final policy by the end of June.

The FCA also confirms that the Prudential Regulation Authority (PRA) and the FCA will not be taking forward at this time their plans to bring in final rules on diversity and inclusion in the financial sector (in response to their 2023 consultations). As noted in the FCA's related statement, this decision has been taken in response to the feedback the regulators have received, expected legislative developments in the area and so as to avoid imposing additional burdens on firms.

Topic : Regulatory Processes and Procedures

IOSCO publishes 2025 Work Program

12 March 2025

The International Organization of Securities Commissions (IOSCO) has published its 2025 Work Program, setting out its ongoing and planned initiatives for 2025. These include: (i) prioritising issues related to non-bank financial intermediation; (ii) developing measures to mitigate risks associated with pre-hedging practices employed by market intermediaries; (iii) conducting a series of targeted actions to tackle new risks to retail investors, including imitative and copy trading, poor digital engagement practices and finfluencer activities; (iv) launching a pilot crypto and digital assets implementation monitoring initiative to understand policy implementation among IOSCO member jurisdictions; (v) continuing work to strengthen the operational resilience of financial market infrastructures; and (vi) assisting with capacity building for jurisdictions that are seeking to adopt or apply the International Sustainability Standards Board standards, as well as those seeking to develop carbon markets in their jurisdictions.

Topic : Securities

EU amending technical standards published for specifying the data collection for the 2025 benchmarking exercise

12 March 2025

The Commission Implementing Regulation (EU) 2025/379 has been published in the Official Journal of the European Union. The EU Capital Requirements Directive requires competent authorities to conduct an annual assessment of the quality of internal approaches used for the calculation of own funds requirements. To assist competent authorities in this assessment, the European Banking Authority calculates and distributes benchmark values to competent authorities that allows a comparison of individual institutions' risk parameters. These benchmark values are based on data submitted by institutions as laid out in Commission Implementing Regulation (EU) 2016/2070 which specifies the benchmarking portfolios, templates, and definitions to be used as part of the annual benchmarking exercises. Commission Implementing Regulation (EU) 2025/379 amends the implementing technical standards set out in Implementing Regulation (EU) 2016/2070, replacing the existing annexes IV, V, VI, VII, and X. It will enter into force on 1 April.

Topic : Prudential Regulation

IOSCO publishes consultation report on AI in capital markets

12 March 2025

The International Organization of Securities Commissions (IOSCO) has published a consultation report on the use cases, risks and challenges of AI in capital markets. The report, which is based on feedback from IOSCO's members and industry participants, discusses: (i) AI use cases in capital markets (which have evolved since IOSCO's 2021 AI report); (ii) risks, issues, and challenges related to investor protection, market integrity, and financial stability arising from AI; and (iii) steps that market participants have taken to manage risks and govern development and deployment of AI systems.

Key findings of the report include that firms are increasingly using AI to support decision-making processes (e.g., robo-advising and algorithmic trading) as well as for internal operations and processes. Commonly cited risks include malicious use of AI, concentration, outsourcing, and third-party dependency and risks arising from interactions between humans and AI systems, including a lack of accountability, insufficient oversight, and over-reliance on technology for decision-making. The report also discusses the varied regulatory responses to AI, with some regulators applying existing regulatory frameworks and others developing new frameworks to address the unique challenges posed by AI.

IOSCO is now inviting feedback on the content of the report and other potential areas of focus to inform its approach to developing tools which may help regulators combat the risks of AI in the future. Comments may be submitted on or before 11 April.

Topic : Artificial Intelligence

FCA statement on sustainability regulations and UK defence

11 March 2025

The UK Financial Conduct Authority (FCA) has published a statement confirming that there is nothing in its rules, including its sustainability rules, that prevents investment in or finance for defence companies. The FCA confirms that it is up to individual lenders and investors whether they provide capital to defence companies.

The FCA's sustainability-related rules and regulations include: (i) its Sustainability Disclosure Requirements (SDR), including rules on investment labels for asset managers, and an anti-greenwashing rule applicable to all FCA-authorised firms; (ii) disclosure rules for listed issuers, asset managers and asset owners aligned with the Taskforce on Climate-related Financial Disclosures standards; and (iii) its proposed adoption of the International Sustainability Standards Board's standards in the UK. HM Treasury is also consulting on the proposed regulatory regime for ESG ratings providers. None of these rules require financial institutions to treat companies differently because they are in the defence sector.

Topic : Sustainable Finance

PSR publishes policy statement on 2024 APP scams data

11 March 2025

The UK Payment Systems Regulator (PSR) has published a policy statement outlining its approach to publishing authorised push payment (APP) scams data for 2024.

In 2025, the PSR will take a different approach to publishing the data, following the introduction of the reimbursement requirement on 7 October 2024, which ensures victims of APP scams are reimbursed in all but exceptional cases. As a result, the PSR is planning to publish two separate data updates for 2024, as data before and after the policy took effect cannot be directly compared. The first report will cover APP scams where the fraudulent transaction took place over Faster Payments before 7 October 2024 and the case was closed between 1 January and 31 December 2024. The second report will cover APP scams where the fraudulent transaction took place after 7 October 2024 and the case was closed between 7 October and 31 December 2024.

The PSR also confirms that it intends to publish a call for views in Spring 2025 to ensure that its future reporting aligns with consumer needs, regulatory requirements and its commitment to transparency. Considerations will include whether the PSR reports at the firm or industry level, the frequency of future reporting and the potential inclusion of additional metrics.

Topic : Payment Services and Payment Systems

FCA statement on motor finance review next steps

11 March 2025

The UK Financial Conduct Authority (FCA) has published a statement informing firms, consumers and stakeholders of next steps in its review of the past use of motor finance discretionary commission arrangements.

The Court of Appeal handed down its judgement in three related motor finance appeals on 25 October 2024, finding that there was a fiduciary relationship between the dealer and the consumer, raising the prospect of widespread liability among motor finance firms that failed properly to disclose commissions to customers. The Supreme Court will hear an appeal against the Court of Appeal's judgement on 1 to 3 April. The FCA's statement confirms that, if it concludes that motor finance customers have lost out (taking into account the Supreme Court's decision), it is likely to consult on an industry-wide redress scheme. Firms would be responsible for determining whether customers had lost out due to their failings, but the FCA would set rules that firms must follow under the scheme and introduce checks to ensure they do. The FCA will confirm within six weeks of the Supreme Court's decision whether it is proposing a redress scheme and, if so, how that would be taken forward. It may also consult separately on changes to its rules, depending on the Supreme Court's decision.

Topic : Consumer / Retail

FCA publishes review of liquidity risk management at wholesale trading firms

10 March 2025

The UK Financial Conduct Authority (FCA) has published observations on good and poor liquidity risk management practices from its multi-firm review of wholesale trading (sell-side) firms in scope of the Investment Firms Prudential Regime (IFPR). In recent years, market stress events such as the COVID pandemic, the Russia-Ukraine war, the nickel price spike and the collapse of Credit Suisse and Silicon Valley Bank have prompted liquidity shocks for some firms. The FCA has, since 2023, written to sell-side firms on multiple occasions on the subject of liquidity risk management, noting that some firms were failing to develop their own competence in the area and advising on actions firms should be taking to manage liquidity risk.

The FCA's multi-firm review covered larger sell-side firms that are prudentially supervised by the FCA and compared their approaches on liquidity risk management. The FCA has set out examples of good and poor practices in a range of areas including governance and risk culture, stress preparedness, contingency funding plans and wind-down plans, and liquidity risk management capabilities. In general, the FCA found that many firms had appropriate and proportionate approaches, but some firms were weaker with approaches not proportionate to their size and the instantaneous nature of their liquidity risks. Following its review, the FCA took action against some firms and has confirmed it will continue to give feedback and use other regulatory tools where it finds firms are not properly managing liquidity risks. Firms are encouraged to use the good and poor practices identified in the review to improve their liquidity risk management capabilities. The FCA also plans to organise workshops and roundtables to share its observations.

Topic : Financial Market Infrastructure

The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.