The UK Payment Systems Regulator (PSR) has published its policy statement PS26/2, confirming its decision to remove the expiry date from its Specific Direction 17 (SD17). SD17 requires most payment service providers (PSPs) to provide the confirmation of payee (CoP) service, which helps to prevent misdirected payments and reduce certain types of authorised push payment fraud by checking whether the name on a payee's account matches the details provided by the payer. SD17 was due to expire on 1 November but will now remain in force unless varied or revoked. This addresses the potential risk that CoP coverage could weaken over time as PSPs may stop using it and new PSPs might not adopt it.

The PSR will review the requirement to provide CoP in five years' time, or sooner if significant developments affecting CoP or the wider payments landscape warrant it. It will also consider the case for expanding CoP requirements to a wider group of PSPs, to include those that currently provide CoP voluntarily. The PSR will engage with these firms to test the potential impacts identified through the July consultation, including incremental governance, compliance and legal costs, before deciding whether to consult on any future proposal. The scope of SD17 therefore remains unchanged at this stage. The PSR published the updated version of SD17 (SD17a) together with a tracked changes version, alongside its policy statement. 

The UK Financial Conduct Authority (FCA) and UK Prudential Regulation Authority (PRA) have published consultation papers (FCA CP26/37 and PRA CP14/26) setting out the second phase of their reforms to the Senior Managers and Certification Regime (SMCR). The proposals build on the Phase 1 reforms confirmed in April and seek to make the regime more proportionate and easier to operate while maintaining individual accountability and standards of conduct. They also anticipate changes under the Financial Services and Markets Bill 2026 (FSM Bill), which will remove many prescriptive SMCR requirements from legislation and make the regulators responsible for deciding how these requirements should apply in their rules. The regulators are consulting now alongside the FSM Bill so they can make any changes to the rules as soon as possible after royal assent.

Both regulators have sought to align proposals as far as possible to reduce complexity for dual-regulated firms. The proposed reforms would significantly streamline the Senior Managers Regime, including reducing the number of senior management functions (SMFs) requiring approvals and introducing an SMF notification process instead; simplifying the application process; extending the temporary SMF cover rule from 12 to 18 weeks; removing some senior manager prescribed responsibilities; and reducing the frequency of submission of statements of responsibilities and management responsibilities maps. The FCA is also proposing to reduce the number of firms subject to the enhanced regime by raising the relevant threshold.

The regulators also propose removing the Certification Regime and instead relying on other rules to achieve similar outcomes. Under the PRA proposals, this includes removing requirements to assess the fitness and propriety of individuals within scope of its Certification Regime, both on appointment and annually. In addition, the FCA is proposing to retire its directory of certified persons and remove the requirement for firms to provide information on directory persons, simplify conduct rules training and raise the thresholds for reporting conduct rule breaches.

The deadline for responses to both consultations is 22 January 2027. The regulators expect to publish a final policy statement in H1 2027, with a view to implementing the changes around six months later in H2 2027.

The Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 have been published, accompanied by an explanatory memorandum. The Regulations support the transition to the FSMA 2000 model of regulation, under which detailed prudential requirements are set by the UK Prudential Regulation Authority within a framework established by government and Parliament. This transition entails the revocation of provisions of the UK Capital Requirements Regulation (UK CRR) and restatements, as needed, in UK legislation to facilitate the FSMA model, with UK CRR provisions replaced with regulator rules, supervisory statements and statements of policy.

The Regulations restate existing UK CRR equivalence provisions in legislation to create a single overseas prudential requirements regime (OPRR), preserving the overall scope and effect of the current equivalence regimes and also preserving existing equivalence decisions by treating them as if they were designations under the new OPRR.

The draft version of the Regulations was laid before Parliament in July. We cover the OPRR in more detail in our blog post titled “UK PRA final rule changes for overseas prudential requirements regime”. The Regulations will enter into force on 1 January 2027.

The UK Financial Conduct Authority (FCA) has published a user guide on delegating access for submitting fund authorisation applications following its recent announcement that fund authorisation applications and notifications will gradually move from an email-based system to fully digital forms submitted online. From 2 November, the FCA will start asking firms to submit certain applications and notifications online via FCA Connect, with the transition taking place in phases. The FCA states that it is introducing the changes over a two-year period to reflect the scale of the programme and the number of fund authorisation forms affected. The user guide provides instructions on how firm users can delegate the appropriate access to submit fund authorisation applications and notifications using Connect. It covers applications for authorising new schemes in the UK, requests for approval to change or wind-up an existing authorised fund and notifications of an approved change that has been made to a fund (Form FN).

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/36, consulting on amendments to its Perimeter Guidance Manual (PERG) within the FCA Handbook to reflect recent legislative changes to the UK's cryptoasset regulatory perimeter. The FCA previously published its final perimeter guidance in PS26/18 in September, to help firms understand the scope of the new regulated cryptoasset activities and when authorisation and permissions may be required. The day before PS26/18 was published, the government made further amendments to the regime through a second statutory instrument (SI), the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026, which introduces further exclusions from certain of the regulated cryptoasset activities. For more detail, you may wish to read our blog post titled "UK lays draft SI amending the 2026 Cryptoasset Regulations".

The FCA is now consulting on changes to its existing PERG 18 guidance to reflect the amendments in the second SI. The proposed changes explain the FCA's view of how the amendments in the second SI apply, and how the new exclusions interact with the regulated cryptoasset activities. In addition, the FCA also proposes to add guidance to PERG 18 on the extent to which decentralisation can affect perimeter analysis. The existing PERG 18 guidance and the proposed amendments in this consultation are intended to be read together. The FCA also proposes consequential amendments to PERG 8, its financial promotion guidance, reflecting amendments to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 made by the second SI.

The deadline for responses is 18 November. The FCA expects to publish its final guidance in spring 2027, ahead of the new cryptoasset regulatory regime's go-live date on 25 October 2027.

The FCA also published an updated webpage in which it acknowledges that the timing of the publication of the second SI may have created uncertainty for a small number of firms around the need to be authorised. The FCA explains that where a firm can demonstrate that the uncertainty relating to the technical services provider exclusion has materially impacted its ability to submit a complete application during the application period, the FCA will exercise some forbearance. Under these circumstances, provided a firm submits an otherwise complete application during the application period, the FCA will allow the firm additional time to address any incomplete aspects of its application relating to the arranging permission. Impacted firms are encouraged to engage with the FCA through its pre-application support service.

Commission Delegated Regulation (EU) 2026/2343 has been published in the Official Journal of the European Union (OJ). The Delegated Regulation amends the regulatory technical standards (RTS) on the clearing thresholds and the mechanisms that trigger their review set out in Delegated Regulation (EU) No 149/2013, to reflect changes introduced by the revised European Market Infrastructure Regulation (EMIR 3). The Delegated Regulation was adopted in July and was based on the European Securities and Markets Authority's final report published in February. There are no substantive changes made to the Delegated Regulation since its adoption. These changes are important for derivatives counterparties as the clearing thresholds determine an entity's counterparty classification under EMIR and, therefore, which EMIR obligations apply to it (for example, uncleared margin). The Delegated Regulation will enter into force on 10 November, 20 days following publication in the OJ, upon which date the new rules relating to the EU clearing thresholds will be effective. However, this will not necessarily mean that EU counterparty classifications need to be re-calculated (and, if they are different, change) with effect from 10 November, as counterparties have flexibility on whether to re-calculate their EMIR status immediately or wait until their usual annual calculation date.

The UK Financial Conduct Authority (FCA) has published a guidance consultation (GC26/7) on decentralised finance (DeFi). The FCA is consulting on non-Handbook guidance to help firms understand how existing operational resilience and financial crime requirements may apply when they provide financial services using, or interacting with, DeFi. The proposed guidance is primarily intended for FCA-authorised firms that use or interact with DeFi as part of their regulated activities, including firms carrying on future regulated cryptoasset activities. The proposed guidance provides observations on the current risk landscape and illustrative examples of measures firms may wish to consider when designing or enhancing their systems and controls. It explains how firms should assess and manage DeFi risks in the context of the FCA's operational resilience framework under SYSC 15A, including through mapping, scenario testing, communication strategies and third-party arrangements. It also addresses financial crime risks and how firms should consider relevant obligations under SYSC 6 and the Money Laundering Regulations 2017, including in relation to risk assessments, systems and controls, customer due diligence, ongoing monitoring, suspicious activity reporting and the Travel Rule.

The FCA emphasises that the guidance does not create new regulatory requirements and that firms remain responsible for complying with existing legal and regulatory requirements when using or interacting with DeFi. Where they cannot do so adequately, firms are reminded that they should consider whether the activity is appropriate for their business and clients. The deadline for responses is 18 November, with the final guidance expected in Q1 2027.

The European Securities and Markets Authority (ESMA) has published a final report containing draft regulatory technical standards (RTS) specifying the circumstances in which transactions resulting from post-trade risk reduction (PTRR) services will be exempt from the clearing obligation under the revised European Market Infrastructure Regulation (EMIR 3). The draft RTS: (i) specify the requirements regarding PTRR services and their resulting transactions which are eligible for the clearing obligation exemption, including compression, portfolio rebalancing and basis risk optimisation; (ii) set out the common conditions on market risk neutrality and risk reduction; (iii) further define the obligations that PTRR service providers should meet; and (iv) detail the requirements on transparency, algorithms, execution, controls, record-keeping and monitoring of the exemption. ESMA states the aim is to facilitate the use of PTRR services and ensure that the exemption is used under the conditions laid down in EMIR 3 and does not lead to the misuse of the clearing obligation.

As feedback to the February consultation was broadly supportive, ESMA has made only limited adjustments to the final draft RTS. The final draft RTS were submitted to the European Commission (EC) on 9 October for endorsement. The EC has three months to decide whether to endorse the proposed RTS.

The UK Financial Conduct Authority (FCA) has published a new webpage setting out examples of good practice and areas for improvement to support the safe and responsible adoption of AI in financial services. The examples are drawn from industry engagement and are illustrative and non-exhaustive, which will evolve as practice develops. They are relevant to a variety of AI use cases, such as those using machine learning, generative or agentic AI. They do not create new requirements, prescribe a single model or replace firms' responsibility for deciding what is appropriate and proportionate for their own AI use cases, risks and potential impact. While the FCA identified positive practices, it also identified key areas for improvement, including:

• Consumer duty and consumers in vulnerable circumstances: the FCA found that some firms built AI tools without establishing the consumer problem, target market or foreseeable harms. Some used guardrails that addressed one risk but created another. Some excluded consumers in vulnerable circumstances by default without providing another way for them to get support. The FCA reminds firms that they remain responsible for consumer outcomes where they deploy AI-supported tools and refers firms to its consumer duty guidance (FG22/5) and guidance on the fair treatment of vulnerable consumers (FG21/1).
• Governance and accountability: to govern effectively, firms need to have proportionate oversight, clear accountability and risk-based controls across the AI lifecycle. The FCA found that some firms had informal approval processes or generic governance arrangements, with control functions not involved enough. Some firms took a retrospective approach, designing and deploying AI use cases before considering how to govern them. Others had unclear responsibility for AI systems. Monitoring was sometimes narrow, reactive or static, and oversight functions sometimes lacked AI-specific capability. Further issues included poor documentation and delegating responsibility entirely to technical teams without sufficient understanding or effective challenge. The FCA states that firms remain responsible for the AI systems they develop, procure and deploy, including their outputs and outcomes.
• Operational resilience: the FCA found that some firms did not appropriately consider their use of AI, or their dependence on AI models, in their operational resilience plans. Others relied on vendors' assurances without challenging or testing them. Some relied too heavily on hard-to-replace AI providers and were dependent on a single platform without exit options. The FCA reminds firms that while they can outsource AI services, they remain responsible for them.

On the same date, the FCA also published a speech delivered by Jessica Rasu, chief data, information and intelligence officer at the FCA, on building the future of finance in the age of AI.

The European Securities and Markets Authority (ESMA) has published a final report containing final draft regulatory technical standards (RTS) amending Commission Delegated Regulation (EU) No 153/2013 to reflect changes specified under the revised European Market Infrastructure Regulation (EMIR 3). EMIR 3 amended Article 46 of EMIR to permanently broaden both the type of eligible guarantees and the scope of who may use them. The final draft RTS specify the conditions under which public guarantees, public bank guarantees and commercial bank guarantees may be accepted as collateral, including appropriate concentration limits, credit quality requirements and stringent wrong-way risk requirements for public bank guarantees and commercial bank guarantees.

In addition, while EMIR 3 does not amend Article 47 of EMIR on investment policy, ESMA is also proposing targeted changes to the central counterparty (CCP) investment policy set out under Delegated Regulation (EU) No 153/2013. The targeted changes concern: (i) the conditions under which debt instruments can be considered highly liquid, bearing minimal credit and market risk and hence can be considered as eligible financial instruments for the purpose of CCP investment policy; and (ii) the highly secured arrangements in which financial instruments posted as margins or as default fund contributions can be deposited. The RTS were consulted on in February. ESMA will submit the final report and draft RTS to the European Commission, which has three months to decide whether to adopt them. Following their adoption, the RTS are then subject to non-objection by the European Parliament and the Council of the EU.

The European Securities and Markets Authority (ESMA) has published its final report on revised guidelines on standardised procedures and messaging protocols between investment firms and their professional clients under the Central Securities Depositories Regulation (CSDR). The revised guidelines follow the May consultation and update ESMA's 2019 guidelines to align them with the amended regulatory technical standards (RTS) on settlement discipline. Under the new regulatory environment, investment firms need to receive their professional clients' settlement details earlier than previously required. The amendments are designed to enhance settlement efficiency and support a smooth transition to T+1. The guidelines clarify the key elements necessary to achieve the new regulatory objective, including: (i) the compulsory use of electronic standardised communication methods; and (ii) the adoption of international open communication procedures and standards for messaging and reference data.

Only a subset of the original guidelines has been amended. The revised guidelines will be published on ESMA's website once they have been translated into all official EU languages. They will apply from 7 December, alongside the relevant provisions of the RTS on settlement discipline. They will also replace the 2019 guidelines from this date. Tracked and clean versions of the revised guidelines are available in Annexes III and IV of the final report.

The UK Financial Conduct Authority (FCA) has published a feedback statement (FS26/3) to its discussion paper (DP25/3) on how its rules and regulatory framework could better support consumers investing without an adviser and setting out its next steps. The discussion paper was part of a set of publications forming the "landmark package to boost UK investment culture". The FCA has confirmed in its feedback statement that it does not intend to take forward every potential reform at once. Instead, it will prioritise the areas where further work can make the greatest difference to consumer outcomes, while giving firms and the market time to prepare for change. The FCA's next steps include:

• reviewing its financial promotions rules for high-risk investments and working with stakeholders to assess the harm caused by any current inconsistencies, including those highlighted in the feedback statement. The FCA still considers, despite some feedback that peer-to-peer investments should fall in the restricted mass market investment category
• consulting on its rules and guidance on risk warnings in financial promotions for mainstream investments in H1 2027, supported by consumer testing
• reviewing how the appropriateness assessment works in practice, including the impact of the current model and the merits of alternatives. The FCA plans to engage with stakeholders in early 2027
• engaging with HM Treasury on the need for legislative change to address concerns about the number of consumers being inappropriately opted out of protections.

Separately, the FCA has already begun a multi-firm review of how firms manufacturing model portfolio services are achieving good outcomes for consumers and expects to publish its findings by Q1 2027. The FCA also reminds firms that the consumer composite investments regime will come into full force on 8 June 2027 and it plans to publish final rules on simplifying consumer investment disclosures by the end of the year.

The European Securities and Markets Authority (ESMA) has published updated and streamlined guidelines on the delay in the disclosure of inside information under the Market Abuse Regulation (MAR). Under MAR, issuers are required to disclose to the public as soon as possible directly relevant inside information, to ensure that investors are informed and to prevent insider dealing. In specific circumstances, issuers may delay public disclosure to avoid prejudicing their legitimate interests. These guidelines help issuers in their decision to delay disclosure by providing a non-exhaustive list of legitimate interests that could justify such delay.

Following its February consultation, ESMA has identified five additional legitimate interests that may justify delayed disclosure, including:

• where the issuer is requested not to disclose information by a public authority
• where the issuer needs to collect additional information to enable a correct assessment of inside information by market participants
• where the issuer may risk the loss of a business opportunity following the disclosure of sensitive commercial information
• where the appointment of a member of the issuer's governing body or a manager holding a key position could be jeopardised
• where the disclosure of inside information concerning companies within the same group could cause a direct prejudice to the issuer and undermine the effectiveness of the delay applied by another company within the group.

ESMA has also removed the legitimate interests for delayed disclosure relating to protracted processes, to reflect the fact that since June, issuers are no longer required to immediately disclose inside information relating to these processes before their completion. The revised guidelines will apply from the date they are published on ESMA’s website in all official EU languages.

The Bank of England (BoE) has published a consultation paper setting out proposals for updated rules that would permit central counterparties (CCPs) to accept uncollateralised letters of credit (LOCs) as collateral. The consultation also covers the risk mitigants that CCPs would have to implement if they chose to accept this type of collateral. The proposals relate to initial margin only, and the BoE does not expect CCPs to accept LOCs as variation margin. Any CCPs wishing to accept LOCs would need to apply for the BoE's permission in the usual way; the BoE is not proposing a separate permission regime for LOCs.

The proposed changes would be implemented in the Collateral Part of the UK CCP Rulebook (currently still in draft). Key proposals include:

• References to "commercial bank guarantees" would be replaced with "commercial bank letters of credit", which is the terminology generally used by market participants.
• Currently, CCPs can only accept commercial bank guarantees from non-financial counterparties (NFCs) that are clearing members. The consultation proposes allowing CCPs to accept LOCs from NFCs that clear as clients, for example through a "pass-through" model.
• The requirement for LOCs to be fully collateralised would be removed.
• Current draft rule 5.1(2) would be amended so that acceptable LOCs would need to be issued by authorised UK credit institutions or authorised overseas credit institutions.
• CCPs would be required to monitor each issuer's creditworthiness on an ongoing basis.
• The single-issuer limit would fall from 10% to 5% of the CCP's total collateral.
• Current draft rule 10.4(2) allows CCPs to increase the current 10% single-issuer limit to 25%, where commercial bank guarantees constitute over 50% of the CCP's total collateral. This rule would be deleted.
• CCPs would also have to run validation checks with the issuer before accepting an LOC.
• To qualify as highly liquid collateral, an LOC that names both the CCP and the clearing member (posting on behalf of the client) as beneficiaries would need to require the CCP's consent before the clearing member could redeem it.

The Bank also expects CCPs to factor LOCs into their stress testing, including scenarios where the LOC issuers to which they have the largest exposures fail.

The deadline for responses is 15 January 2027. The BoE proposes to publish the final rules in the first half of 2027, with no implementation period. The rules would come into force no earlier than the date on which the UK CCP Rulebook takes effect. The BoE considers that an implementation period is not necessary as the proposals only impose new requirements on CCPs that choose to accept LOCs as collateral.

The UK Payment Systems Regulator (PSR) has published a consultation paper on proposals to simplify the regulatory framework for access to payment systems. The PSR proposes to introduce a single access regime, while broadly maintaining existing access requirements. The proposals form part of the planned abolition of the PSR and aim to remove overlap and fragmentation across various regulatory requirements governing payment system access. The consultation assumes that HM Treasury will proceed with its plans to repeal the payment system access regime in the Payment Services Regulations 2017 (PSRs 2017) and that the PSR's functions, including its payment access powers, will be substantively transferred to the UK Financial Conduct Authority.

Specifically, the PSR proposes to:

• revise General Direction 2 (GD2), so that it becomes the primary regulatory measure to ensure access requirements are 'always on' and which will largely consolidate the requirements currently spread across the PSRs 2017 and GDs 2 and GD3, insofar as they apply to regulated payment systems. The revised GD2 would introduce a single test for direct and indirect access, while preserving the existing principles underpinning access. It would also extend the existing requirement to publish access requirements to all operators of payment systems designated under the Financial Services (Banking Reform) Act 2013
• revoke GD3 through the revised GD2, as GD3 would no longer be required once regulation 103 of the PSRs 2017 is revoked
• update the PSR's guidance on access requirements while maintaining its substance (subject to minor amendments).

The proposed revised GD2 and guidance are available on the PSR's webpage. The deadline for responses is 10 December. When determining next steps, the PSR will account for potential legislative changes, including under the Financial Services and Markets Bill and the potential revocation of regulations 103 and 104 of the PSRs 2017.

The Financial Stability Board (FSB) has published its final report on sound practices for responsible adoption of AI, following its consultation in June. The report identifies 12 sound practices to help financial institutions harness the benefits of AI while managing its risks responsibly, in ways that support the resilience of the financial system. The principles are structured around three core areas: (i) organisation-wide AI governance (practices 1–4); (ii) risk management and mitigation across the lifecycle of AI development and deployment (practices 5–10); and (iii) management of AI-related cyber, information and communication technology, and third-party risks (practices 11–12).

The sound practices serve as a practical toolkit that financial institutions can tailor to their specific context and risk profile and integrate into existing frameworks, including those for cyber and third-party risk. The report includes case studies illustrating the benefits reported by financial institutions and how some sound practices have been applied proportionately.

The European Securities and Markets Authority (ESMA) has published an updated manual on transparency under the Markets in Financial Instruments Directive II and Markets in Financial Instruments Regulation. The updated manual provides further guidance on identifying over-the-counter (OTC) derivatives subject to transparency requirements and clarifies how identifying reference data for OTC derivatives should be provided for transparency purposes, with a view to supporting consistency in data reported to and published through the consolidated tape. It also incorporates published Q&As and new recommendations on the application of the tick-size regime, including circumstances in which trading venues and national competent authorities may intervene. ESMA notes that the new guidance on upcoming changes with regard to OTC identifying reference data should be considered draft as the relevant amending Regulation has not yet entered into force.

The UK Financial Conduct Authority (FCA) has published its findings from a May survey assessing firms' actions in response to its November 2025 multi-firm review of contract for difference (CFD) providers' compliance with the consumer duty price and value outcome. Most firms had made or planned changes, but many of the changes were relatively minor and did not make a material difference. The FCA expressed disappointment at the pace of progress and highlighted the following key concerns:

• Fair value assessments: firms should not treat these merely as a tick-box exercise and should focus more on consumer outcomes and potential harm.
• Communications: firms do not explain their costs prominently enough in the client journey, often including them only in terms and conditions or key information documents (KIDs). Overnight charges are not always shown as a projected annual percentage. Firms should consider if they could produce better consumer outcomes with earlier and more prominent signposting to information about pricing and overall fair value.
• Overnight funding charges: the level of these charges and the way firms apply them may not be consistent with price and value obligations under the duty. Some firms' charges seem high in the context of prevailing base rates and peer comparisons.

The FCA strongly recommends that firms review the good practice and areas of concern and consider whether they should change anything to meet their price and fair value obligations. It expects firms to be able to show that they have reviewed their charges and will follow up with them individually where it has concerns.

The Financial Stability Board (FSB) has published a report (the second stage of a three-stage project) on the G20 implementation monitoring review (IMR) following the October 2025 interim review. The report assesses the extent to which the FSB's policy design process facilitates effective implementation of agreed policies. Examining international reforms developed by the FSB after the 2008 global financial crisis, the report finds that differences in national legal frameworks, market structures and political capacity are the main reason for uneven implementation. However, it also notes that some implementation challenges stem from the policy development process itself, suggesting that targeted and proportionate reforms to that process is one element which could help improve implementation outcomes. The IMR's findings and recommendations on the FSB's processes are set out in section 3 of the report.

The UK Prudential Regulation Authority (PRA) and UK Financial Conduct Authority (FCA) have published policy statement PS19/26 / PS26/20 confirming changes to the loan-to-income (LTI) flow limit rule for mortgage lending. The regulators are removing the firm-level 15% cap on high-LTI lending. This is in line with the Financial Policy Committee (FPC) recommendation made in 2025 that the regulators amend implementation of the FPC LTI flow limit to allow lenders flexibility to set their own high-LTI strategies in line with their risk appetite and business models, while aiming to ensure the aggregate flow remained at a level consistent with the FPC-recommended 15% limit.

Key points from the final policy include:

• Following consultation feedback, individual firms' high-LTI flows and any adjustments required, will be measured on a rolling four-quarter basis. As consulted on, the aggregate flow will be monitored on a single-calendar-quarter basis to judge consistency with the FPC limit.
• The PRA will publish the aggregate high-LTI flow on its website each quarter. The FCA will publish information on its website when it expects adjustments. Following consultation feedback, the regulators have decided that alongside this, they will publish additional information to provide lenders with more visibility of trends in the mortgage market.
• The regulators' expectations on governance and risk management for high-LTI lending are set out in a new PRA supervisory statement (SS2/26) and new FCA non-Handbook guidance (FG26/11), which replaces the existing guidance. Both will take effect on 28 October.

The regulators also received responses regarding the calibration of the FPC's definition of high LTI (an LTI ratio of 4.5x) and the 15% aggregate flow limit. The regulators treated these points as outside the scope of the consultation. They have passed them to the FPC to consider in its next review of housing policies.

The UK Financial Conduct Authority (FCA) has published Market Watch 86, setting out its observations from supervisory visits to UK retail brokerage firms on the systems, controls and governance arrangements they use to identify and report potential market abuse. All of these firms used automated surveillance systems, but the FCA found material weaknesses in how their arrangements had been designed, implemented and operated in practice. Key findings include: 

• Too high a threshold for reasonable suspicion: several firms set the bar of reasonable suspicion too high. The FCA reminds firms that they do not need proof of market abuse before they submit a suspicious transaction and order report.
• Poorly tailored alert calibration: several firms had not properly calibrated their alert models in line with the nature of their client base, the financial instruments traded, and relevant market abuse risks.
• Insufficient understanding of surveillance systems: some firms appeared to rely on system settings provided by third-party vendors, which increased the risk that weaknesses in surveillance arrangements would not be identified or challenged. Calibration testing was also often limited.
• Weak governance and oversight: some senior managers had limited understanding of key surveillance activities. In some firms where surveillance responsibilities were split across different functions, no single individual had oversight of end-to-end activities. The FCA also found examples of firms with limited or no formal quality assurance process.
• Market abuse risk assessments lacking granularity: some firms had not considered all relevant characteristics of their business model; for example, they did not differentiate between institutional and retail clients. Others wrongly assumed that having an alert in place was evidence of an effective control capable of mitigating risk.

All firms are advised by the FCA to consider these findings and check whether changes to their surveillance arrangements are required. The FCA will continue to monitor this area.

The Financial Stability Board (FSB) has published a consultation report on proposed regulatory and supervisory modernisation principles. The report states that many financial authorities in FSB member jurisdictions have reviewed their regulatory and supervisory frameworks to ensure they support sustainable economic growth and remain adaptable to current and future material risks, without compromising financial stability or safety and soundness. The FSB proposes eight principles to promote alignment across these reviews. The principles are subject to the following four important understandings: (i) financial stability provides the foundation for sustainable economic growth, which in turn supports financial stability; (ii) the principles build on the commitment to implement internationally agreed standards; (iii) implementation of the principles must be consistent with jurisdictions' legal frameworks and circumstances; and (iv) the principles aim to preserve or enhance existing levels of financial system resilience. The deadline for responses is 8 January 2027. The FSB intends to publish the final report in the first half of 2027.

The BIS Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a joint final report on financial market infrastructures' (FMIs) management of general business risks and general business losses. The report follows the November 2025 consultation and takes into account findings from the Level 3 assessment report on the implementation of PFMI Principle 15 (general business risk), which identified issues with FMIs' management of general business risks and the liquid net assets funded by equity held to cover potential losses. It sets out supplemental guidance to the PFMI for FMIs and relevant authorities, including in relation to the FMIs' recovery and orderly wind-down, specifically on:

• identifying, monitoring and managing general business risks
• determining the minimum amount of liquid net assets funded by equity to be held against potential general business losses
• governance and transparency in managing general business risks.

The guidance in the final report should be taken into account by FMIs and relevant authorities when developing their approach to meeting the PFMI.

Two Regulations supplementing the Central Securities Depositories Regulation No 909/2014 (CSDR) have been published in the Official Journal of the European Union (OJ). The Regulations make amendments to the CSDR framework to reflect reforms introduced by the CSDR Refit Regulation (EU) 2023/2845:

• Commission Delegated Regulation (EU) 2026/1519 amending the regulatory technical standards (RTS) laid down in Delegated Regulation (EU) 2017/392 regarding the information that central securities depositories (CSDs) must provide to competent authorities as part of the review and evaluation process under Article 22(1) of the CSDR.
• Commission Implementing Regulation (EU) 2026/1512 amending the implementing technical standards laid down in Implementing Regulation (EU) 2017/394 as regards standard forms, templates and procedures for the purposes of the information provided by CSDs for the review and evaluation process of central securities depositories.

Separately, Commission Delegated Regulation (EU) 2026/1536 was also published in the OJ on the same date. It amends the RTS laid down in Commission Delegated Regulation (EU) 2018/1229 on settlement discipline to introduce measures aimed at improving settlement efficiency in the EU and supporting the transition from a T+2 to a T+1 settlement cycle on 11 October 2027.

All the Regulations will enter into force on 3 November, being the 20th day following publication in the OJ. The RTS on settlement discipline will generally apply from 7 December, except for certain specified provisions which will apply from 11 October 2027. The RTS on the review and evaluation process will apply from 3 November 2027.

The UK Financial Conduct Authority (FCA) has published a statement confirming that the Upper Tribunal will hear legal challenges to its motor finance redress scheme from 16 to 26 February 2027. While the scheme remains partially suspended pending the outcome of the litigation (meaning firms are not currently required to calculate or pay compensation), the FCA reiterates that lenders must continue to prepare for the scheme and progress complaints as far as possible. The statement provides advice for both lenders and consumers.

The FCA advises that lenders must continue to comply with the rules that remain in force, including by sending letters to consumers who are not owed compensation under the scheme. Lenders should also plan for a range of potential outcomes, including the possibility that, if the scheme or parts of it are quashed, there may be no motor finance redress scheme and no complaint handling pause. In that scenario, lenders would need to be operationally and financially ready to resolve complaints through the usual complaint-handling process and within the usual statutory timescales. The FCA expects lenders to plan rigorously for this possibility, make the necessary financial provisions and engage with their auditors. Firms that have questions are requested to contact the FCA.

The Basel Committee on Banking Supervision (BCBS) has published an assessment report on the UK's implementation of its leverage ratio framework, as part of its Regulatory Consistency Assessment Programme (RCAP). The BCBS also published reports on Australia, Canada, Japan, Korea and Switzerland. All jurisdictions were assessed as compliant except Canada and the UK, which were assessed as "largely compliant", one notch below the highest overall grade.

For the UK, two of the four components of the Basel leverage ratio standard were assessed as compliant, namely: (i) definitions and application, and calculation; and (ii) disclosure requirements.

The exposure measurement component was assessed as "partially non-compliant", which the report states was driven by one material finding: the Basel standards permit the temporary exemption of central bank reserves from the leverage ratio exposure measure, whereas the UK's exemption extends to certain other non-reserve claims on central banks. Other deviations relating to the exposure measure were assessed as not material.

For the buffer requirements and transitional arrangements for the global systemically important banks (G-SIBs) component, this was assessed as "largely compliant", which the report states reflects two potentially material findings: (i) the UK leverage buffer design can be less conservative than the Basel G-SIB leverage buffer in certain situations; and (ii) the absence of automatic capital distribution restrictions when the leverage ratio buffer is not met, with the UK framework relying instead on supervisory intervention. The BCBS Assessment Team also noted that, in several areas, the UK rules go beyond the minimum Basel requirements (as set out in Annex 5 to the report). In accordance with the RCAP Handbook, these stricter rules were not considered as mitigants in the overall or component-level assessments of compliance.

The report also includes the UK Prudential Regulation Authority's response to the assessment, including its justification for those components of the UK framework as highlighted by the BCBS.

The Digital Regulation Cooperation Forum (DRCF) has published a call for input on its workplan for 2027/28. The DRCF seeks views to refresh its understanding of where businesses and other stakeholders encounter overlap between regulatory regimes, or face uncertainty because of the potential interplay between regimes. It also welcomes views on other topics on which the DRCF could coordinate joint work between its member regulators, whether to ensure cohesion, build their capabilities or for other objectives. The deadline for comments is 11:59pm on 20 November.

The Joint Committee of the European Supervisory Authorities (ESAs) (comprising the European Banking Authority, European Insurance and Occupational Pensions Authority and European Securities and Markets Authority) has published its annual work programme for 2027, setting out priorities for addressing cross-sectoral risks and enhancing supervisory coordination across the EU financial sector. The programme identifies digital operational resilience, technological innovation, sustainable finance, securitisation and cross-sectoral risk monitoring as key focus areas.

The Joint Committee states that it will continue its work under the Digital Operational Resilience Act (DORA), including oversight of activities relating to critical ICT third-party service providers and work towards strengthening the financial sector's preparedness against cyber threats. It will also assess emerging technologies such as AI. Consumer protection remains a core priority, alongside efforts to support the consistent application of the EU sustainability framework. The programme also highlights the Joint Committee's role in promoting coordinated supervisory responses to cross-sectoral challenges and supporting the European Commission's objectives for the Savings and Investment Union and under its simplification agenda.

The Financial Stability Board (FSB) has published a note on global stablecoin arrangements, summarising its ongoing work on cross-border vulnerabilities and financial stability monitoring. It builds on the FSB's 2023 high-level recommendations for the regulation, supervision and oversight of global stablecoin arrangements and its 2025 thematic peer review of their implementation. The note highlights that the cross-border reach and use of global stablecoins, which span across multiple entities and authorities, may limit the ability of any single jurisdiction to fully assess or address potential vulnerabilities on its own.

The FSB identifies three areas, relating to the implementation of its 2023 recommendations, that may warrant continued consideration: (i) enhancing monitoring of cross-border vulnerabilities, supported by the indicators mentioned in the note and the FSB's work on stablecoin data availability and limitations; (ii) fostering cross-border cooperation and information-sharing to support implementation of the 2023 recommendations; and (iii) gathering information on emerging approaches to planning for distress or failure of global stablecoin arrangements, with a focus on cross-border issues.

The note also states that to strengthen stablecoin monitoring, members and relevant authorities could consider developing a set of metrics for financial stability monitoring and identifying data gaps, making better use of existing data, and exploring possible industry best practices for data collection and compilation on- and off-chain to improve quality and comparability over time. The note is accompanied by a letter from the FSB’s Chair, Andrew Bailey, addressed to G20 finance ministers and central bank governors, highlighting risks to the global financial system.

The UK Financial Conduct Authority (FCA) has published its findings from a review of governance at a sample of benchmark administrators. The review is the final part of supervisory work undertaken in response to risks identified in the FCA's 2024 portfolio letter, which highlighted weaknesses in some governance arrangements. In this review, the FCA assessed governance across five areas: (i) board composition and capability; (ii) board engagement, challenge and decisions; (iii) governance structure, delegation and escalation; (iv) board packs and information flow; and (v) governance assurance and continuous improvement. Firms generally had established governance frameworks and a clear commitment to oversight and accountability.

The FCA's key observations include:

• Board capability: As risks evolve, firms may benefit from considering whether the board continues to have the right collective capability, for example in technology, cyber resilience, data management and methodology. Where individuals hold several roles, firms may benefit from considering capacity, competing priorities, potential conflicts and key-person dependency.
• Decisions: In some cases, governance records did not clearly capture board decisions, challenge, decision rationale and resulting actions. Firms may want to ensure that decisions taken outside scheduled meetings are brought into the formal governance record where necessary.
• Group structures: Arrangements were most effective where the UK regulated entity retained clear visibility of its own risks and obligations. Where individuals hold responsibilities across several entities or governance bodies, firms should consider how potential conflicts are identified, discussed and managed in practice.
• Management information: Some firms noted that the volume of reporting could make it difficult to identify the most important issues. Firms may wish to consider whether reports distinguish information provided for awareness from matters requiring discussion, decision or escalation.
• Assurance and conflicts: Some firms may benefit from adopting a more structured approach to assessing governance effectiveness. Firms may wish to consider whether their conflicts-of-interest arrangements capture the full range of conflicts most relevant to their businesses, and how these arrangements operate.

The government is currently reviewing the UK Benchmarks Regulation and its consultation on the proposed new Specified Authorised Benchmark Regime closed earlier this year. The FCA welcomed the consultation and is working with the government to reform the regime, although has not confirmed its next steps, and no upcoming formal engagement is noted on the Regulatory Initiatives Grid. It encourages benchmark administrators to engage with the reform process.

The European Securities and Markets Authority (ESMA) has published two thematic notes on sustainability-related claims, one on impact claims and one on climate transition claims. The notes set out practical examples of good and poor practice to help firms comply with the principle that sustainability-related communications should be clear, fair and not misleading, and so help to reduce the risk of greenwashing. On impact claims, the note examines positive impact claims made through funds and bonds. ESMA notes that market participants may have different understandings of, and levels of ambition for claims of positive environmental or social impact. ESMA therefore encourages firms making such claims to explain clearly what difference they expect to make, how they aim to achieve positive impact and how they will measure the results, so that investors receive clear and balanced information. On climate transition claims, the note draws on market practices observed across funds, bonds and benchmarks. It states that such claims are often forward-looking and subject to uncertainty as their achievement may depend on future actions, assumptions and external factors. Accordingly, it stresses the importance of firms clearly communicating their transition ambition, how it is expected to be implemented, and how progress will be assessed and reported, including any relevant assumptions, data limitations and dependencies. Both notes follow ESMA's previous thematic notes on ESG credentials and ESG strategies.

The Council of the EU has published a note with a three-column comparison table on the European Commission's (EC's) proposal for a Regulation amending the Sustainable Finance Disclosure Regulation (SFDR) on sustainability-related disclosures in the financial services sector (SFDR) and Regulation (EU) 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs Regulation), and repealing Commission Delegated Regulation (EU) 2022/1288 (SFDR RTS), known as the SFDR 2.0 proposal. The table presents, side-by-side, the negotiating positions taken by the EC, the European Parliament (EP) and the Council. The table has been published in advance of the trilogue phase which is due to begin in October and follows the mandates adopted by the EP in September and the Council earlier in June.

The draft Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2026 have been laid before Parliament, accompanied by a draft explanatory memorandum. The draft Regulations seek to expand the scope of the Financial Market Infrastructure (FMI) Sandbox powers under the Financial Services and Markets Act 2023 by adding a number of further enactments in addition to those already listed under section 17(3). This includes the National Debt Act 1870, the Finance Act 1916, the Insolvency Act 1986, the Companies Act 1989, the Financial Services (Banking Reform) Act 2013 and the Payment Services Regulations 2017.

The changes are intended to support the operation of the Digital Securities Sandbox (DSS), which enables firms to test digital securities infrastructure and distributed ledger technology solutions in a live market environment under a temporarily modified legal and regulatory regime. Participating entities in the DSS are subject to a set of modified legislative requirements, where existing requirements outside of the DSS may act as a barrier or an obstacle to using new technology in the provision of in-scope FMI activities.

The regulations would allow HM Treasury to apply, disapply or modify the effect of the additional enactments through subsequent statutory instruments where required to facilitate the DSS. Any substantive modifications to the relevant legislation will be set out in future statutory instruments.

The European Banking Authority (EBA) has published a final report containing draft amendments to the regulatory technical standards (RTS) under Delegated Regulation (EU) 2017/390, supplementing the Central Securities Depositories Regulation (CSDR) prudential framework. The changes respond to the CSDR Refit (Regulation (EU) 2023/2845), which now permits banking CSDs to provide banking-type ancillary services to participants of other CSDs, including foreign currency cash settlement. To address the potential credit, liquidity and concentration risks arising from the provision of these services, the EBA was mandated to revise the RTS. The amended RTS update the prudential framework for banking CSDs and designated credit institutions to ensure it adequately reflects and mitigates the additional complexity arising from such arrangements, including credit and concentration risk and collateral management considerations. In addition, the final draft RTS aligns references with amendments made to the Capital Requirements Regulation.

Following the December 2025 consultation, the EBA has made mainly clarificatory amendments. Section 4.2 of the report summarises the key points raised and the subsequent analysis, discussion and action taken (if deemed necessary). The draft RTS will be submitted to the European Commission for endorsement before being published in the Official Journal of the European Union.

The Financial Stability Board (FSB) has published a thematic review, submitted to the G20, assessing jurisdictions' implementation of public sector backstop funding (PBF) mechanisms in line with FSB Key Attribute (KA) 6 and its 2016 guidance. A PBF mechanism provides temporary liquidity support to banks in resolution as a last resort if all other sources of liquidity are exhausted. It is one part of the comprehensive approach to ensuring global systemically important banks (G-SIBs) have reliable access to liquidity in resolution.

The review finds that although significant progress has been made, approximately half of jurisdictions continue to have material gaps in their PBF arrangements. In many jurisdictions, authorities have not clearly established how much temporary public funding would be available once a systemic bank enters resolution or how they would combine and coordinate multiple funding sources, if needed. The review also shows there are multiple ways to design a PBF that can fully meet the FSB's high standards.

The report sets out six recommendations (detailed in section 6) to close the implementation gaps that are identified including: focusing on clear and credible PBF arrangements that can provide liquidity at the scale and speed required for orderly resolution; strengthening operational readiness through governance and testing; and establishing robust arrangements to recover losses, protect taxpayers and mitigate moral hazard.

The European Securities and Markets Authority (ESMA) has published a call for evidence (CfE) on the potential use of tokenised collateral by central counterparties (CCPs). Tokenisation of collateral has been identified as one of the most significant applications of financial-market digitalisation, enabling assets to be mobilised, transferred and reused more efficiently, reducing operational friction and freeing up liquidity and capital across the financial system. ESMA is therefore seeking to understand better its implications for CCPs before determining whether any action within its remit is needed to ensure that these developments take place within a safe and sound regulatory and supervisory framework.

The CfE aims to gather evidence on the legal, market, operational and infrastructure issues raised by tokenised collateral arrangements. ESMA states that the CfE is not intended to reassess or expand the categories of assets eligible as CCP collateral. Rather, it focuses on understanding whether the use of tokenisation may affect the manner in which otherwise eligible assets are mobilised, transferred, managed, protected and realised, and whether existing regulatory and supervisory frameworks remain adequate in that context. The deadline for comments is 15 January 2027. ESMA will review feedback in Q1 2027 and, considering both responses and its broader tokenisation work, will determine the most appropriate next steps.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/35 on fair redemption terms for authorised funds investing in illiquid assets. The proposals apply primarily to non-UCITS retail scheme (NURS) funds invested predominantly in inherently illiquid assets, meaning funds where at least 50% of scheme property is invested in such assets, and that offer regular liquidity.

The FCA proposes the reforms to retail investment fund rules so that a fund’s redemption terms reflect the time it typically takes to sell illiquid assets in the portfolio. Key proposals include:

• broadening the scope of the funds investing in inherently illiquid assets (FIIA) regime by amending the definition of inherently illiquid assets
• limiting the frequency of dealing days (when the fund manager redeems or cancels investors’ units in the fund) to no more than one per month
• minimum 90-day notice periods for redemptions
• aligning the minimum redemption terms with the long-term asset fund (LTAF) regime
• enhancing investor disclosures, including updated risk warnings and prospectus disclosure requirements for funds with limited redemption arrangements
• permitting authorised fund managers (AFMs) of all NURS funds to introduce limited redemption arrangements to align the fund’s redemption terms better with its liquidity profile
• extending deferral powers to all NURS funds operating limited redemption arrangements
• allowing LTAF investors to revoke redemption requests during the notice period if the fund manager is satisfied it would not be unfair to other investors.

The deadline for feedback is 11 December, and final rules are anticipated in H1 2027. The FCA proposes a two-year implementation period for existing NURS funds that would fall within the amended scope of the FIIA regime for the first time. AFMs of these NURS funds newly brought in scope and their depositaries must comply with existing FIIA rules from 1 year after the new rules are made (aside from the risk warning rules).

The European Securities and Markets Authority (ESMA) has published an opinion setting out its supervisory expectations for crypto-asset services involving asset-referenced tokens (ARTs) and e-money tokens (EMTs) that do not comply with the Markets in Crypto-Assets Regulation (MiCAR).

ESMA states that MiCAR-authorised crypto-asset service providers (CASPs) should not provide services in relation to non-compliant ARTs or EMTs. This applies to services including the operation of trading platforms, exchange services, execution of orders, placing of crypto-assets, reception and transmission of orders, investment advice, transfers, custody and administration, and portfolio management, whether provided on a standalone basis or in combination. ESMA further considers that reliance on warnings, disclosures or client acknowledgements would not sufficiently address the concerns identified in the opinion.

The opinion also calls on national competent authorities to ensure that CASPs do not maintain, introduce or facilitate access to such tokens, and that appropriate technical, contractual and organisational controls are in place to prevent clients from acquiring new or increasing existing exposures. Where pre-existing exposures remain, ESMA expects them to be remediated as soon as possible, and no later than three months after the publication of the opinion (i.e. by 8 January 2027). Any continued provision of services is advised to be strictly limited to activities necessary for the liquidation, conversion, withdrawal, transfer or safekeeping of such assets, and should remain time-limited, risk-based, and closely supervised.

The UK Financial Conduct Authority (FCA) has published a blog with findings from its survey of corporate finance firms’ compliance resources and activities. While the FCA identified examples of good practice, it also highlighted areas requiring improvement, emphasising that compliance should not be viewed merely as a series of tasks, but as a culture that senior managers must embed throughout the business.

The key findings were:

• 63% of firms reported having a compliance function that is not dedicated solely to compliance and has other business responsibilities. This can create conflicts of interest, for example where compliance also plays a role in revenue generation.
• Arrangements should be proportionate to the risks involved, but they are only proportionate if they deliver good outcomes. This is particularly important in small firms, where decision-making may be concentrated in a small number of people.
• 90% of respondents used some form of third-party compliance support. However, responsibility for regulatory compliance remains with the relevant senior management function holder, and firms must maintain effective oversight of any third-party support.
• 47% of firms carried out all the activities covered by the survey. The wider gaps related to whistleblowing arrangements, breach registers, monitoring complaints, reporting to management and involving compliance in management meetings. The most common gap was failing to include regulatory compliance in staff performance assessments, reported by 140 firms.

The FCA expects firms to use these findings to reflect on their own arrangements and identify where improvement is needed.

The UK Prudential Regulation Authority (PRA) has published consultation paper CP13/26, proposing a new framework for the automatic indexation of certain regulatory thresholds across the PRA Rulebook, supervisory statements and statements of policy. Under the proposal, eligible fixed monetary thresholds would be updated every five years using UK nominal GDP growth as the indexation metric, with the first update taking effect on 1 July 2031. The PRA states that the framework is intended to address “prudential drag”, where fixed thresholds become more restrictive over time as the economy grows. The criteria and methodology will be set out in a new statement of policy on the PRA’s approach to automatic indexation, a draft of which accompanies the consultation.

The PRA proposes bringing 128 thresholds within scope of the framework (set out in Appendix 3 and Appendix 4 of CP13/26). It also seeks feedback, through a discussion paper, on additional thresholds where the costs and benefits to firms of indexation are less clear to the PRA. These include thresholds relating to internal ratings-based models, liquidity thresholds that interact with credit risk thresholds, and thresholds operating across the PRA and UK Financial Conduct Authority frameworks relating to remuneration, whistleblowing and the Senior Managers and Certification Regime. Appendix 5 sets out the thresholds covered by the discussion chapter. The deadline for responses to both the consultation and the discussion paper is 7 February.

The EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) has published its response to the European Commission’s (EC) consultation on the review of the Markets in Crypto-Assets Regulation (MiCAR). The targeted consultation sought views on technical and legal issues on whether MiCAR remains fit for purpose in light of evolving market and international developments. AMLA makes recommendations in five areas where targeted amendments or clarifications could help address money laundering and terrorist financing (ML/TF) risks more effectively and support consistent supervision across the EU.

These are:

• Staking, lending and borrowing: AMLA suggests that the EC consider bringing these activities within MiCAR’s regulatory framework, reflecting their specific ML/TF risks.
• Decentralised Finance (DeFi) arrangements: AMLA invites consideration of a clear legal definition and common criteria for identifying who exercises effective control over crypto-asset services or activities through DeFi arrangements.
• Unauthorised stablecoins: AMLA encourages a consistent EU-wide approach that removes legal uncertainty.
• Certain asset-referenced token issuers not considered as obliged entities under the anti-money laundering and countering the financing of terrorism (AML/CFT) framework: AMLA suggests reviewing this interaction, including whether certain token issuers should fall within scope of AML/CFT rules.
• Cross-border supervision of service providers: AMLA sees scope for clearer information requirements to support effective supervision.

The European Securities and Markets Authority (ESMA) has published a statement on the transitional regime for third-country central securities depositories (CSDs). ESMA notes that, under the Central Securities Depositories Regulation (Regulation 909/2014), third-country CSDs may continue to provide certain notary services to issuers and central maintenance services to participants only until a recognition decision is taken or until 17 January 2027, whichever is earlier. ESMA highlights that the Market Integration and Supervision Package (MISP) proposes to extend this transitional period by a further three years following MISP’s entry into force, and that both the Council of the EU and the European Parliament appear broadly supportive of the extension.

In response to operational concerns raised by market participants, and in light of the emerging consensus among EU co-legislators, ESMA acknowledges that neither it nor national competent authorities (NCAs) can suspend or disapply directly applicable EU legislation, even in exceptional circumstances, and that any formal changes to the applicable regime would require EU legislation. Nonetheless, ESMA expects NCAs not to prioritise supervisory or enforcement action against non-recognised third-country CSDs pending the proposed extension under MISP taking effect.

The EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) has published a consultation on draft regulatory technical standards (RTS) for a central EU-wide anti-money laundering and countering the financing of terrorism (AML/CFT) database. The database will act as a single platform through which supervisory authorities can report and access information on supervised entities, supervisors and supervisory activities. It is intended to support the exchange of supervisory information across the EU and to make AML/CFT supervision more targeted, risk-based and effective. To keep the reporting burden low, the draft RTS draw primarily on data that supervisors already hold or will collect in any event, so the database should impose no additional reporting costs on obliged entities.

AMLA proposes that supervisory authorities transmit the following information in relation to:

• Supervisory authorities and self-regulatory bodies: their powers and tasks; statistics on resources and staffing; and the supervisory activities they carry out.
• Obliged entities: money laundering and terrorist financing risks; sanctions, administrative measures and periodic penalty payments; and authorisations, withdrawal of authorisations and fit and proper assessments.

The draft RTS also include provisions on measures on data quality, confidentiality and the onward sharing of information contained in the database. AMLA proposes a phased implementation so that supervisors have time to adapt to the new requirements. Stakeholders are invited to give their views at a public hearing on 3 November.

The UK Financial Conduct Authority (FCA) has announced that it will change how firms submit fund authorisation applications and notifications. Firms currently send these by email, but over the next two to three years the FCA will gradually move to fully digital forms submitted online through Connect. The changes are designed to: improve data quality; regulatory oversight and governance; give more clarity and certainty about FCA expectations; and shorten the time it takes the FCA to reach a decision. The FCA is not expecting to significantly change content requirements for these applications and notifications at this stage.

The changes will be made in phases:

• From 2 November, firms must complete the existing forms for new scheme authorisations (Forms 12, 242 and 261C) and submit them, with supporting documents, via Connect. The same applies to forms to amend or wind up an authorised fund (Forms 21, 251, 261Q, 283A and 9, and the UCITS feeder form) and to final notifications (Form FN). After that date, the FCA will not accept these forms by any other method.
• During December, the FCA plans to move scheme document filings for authorised and recognised funds to Connect. Once this is live, it will no longer accept filings by email.
• In early 2027, certain Alternative Investment Fund Managers Directive applications and notifications will move to Connect.

Until then, firms should keep using the current process and are requested to prepare now by checking that the people who make fund applications or notifications have access to Connect. Where a third party submits on a firm’s behalf, the firm should make sure that third party has the right delegated access in Connect. The FCA’s Connect user guide for fund authorisations gives step-by-step instructions.

The Council of the EU has published a note from the Presidency to the Permanent Representatives Committee (COREPER) on the proposed Market Integration and Supervision Package (MISP), together with compromise texts (dated 2 October) of the three legislative proposals forming part of the package, specifically:

• the text of the proposed Regulation on settlement finality, which would repeal the Settlement Finality Directive (Directive 98/26/EC) and amend the Financial Collateral Directive (Directive 2002/47/EC)
• the text of the proposed Directive amending the Undertakings for Collective Investment in Transferable Securities Directive (UCITS), Alternative Investment Fund Managers Directive (AIFMD) and Markets in Financial Instruments Directive II (MiFID II) frameworks on the further development of capital market integration and supervision within the EU (MISP Directive)
• the text of the proposed Regulation amending a range of existing EU financial services legislation to support the further development of EU capital market integration and supervision within the EU (MISP Regulation).

The note states that the compromise texts largely preserve the original legislative proposals from the European Commission and are now presented for final agreement. There has, however, been some movement of note, particularly in relation to the Regulation of Settlement Finality, which has been amended so that the protections for third-country registered and EU systems are more closely aligned.

The note also explains that the texts intend to strengthen market integration, improve supervisory consistency, expand market transparency, and modernise trading infrastructure while balancing the differing priorities of member states. Further detail on the key elements of the proposals is set out in the Annex. The note also highlights that agreement is still needed on the European Securities and Markets Authority funding arrangements and the definition of significant trading venues before the overall package can be agreed.

An updated Council webpage states that the Economic and Financial Affairs Council is expected to agree its position on the legislative proposals at its meeting on 9 October.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/34 on guidance to help firms implement the new transaction reporting rules set out in PS26/15. The rules will come into force on 3 April 2028 and form part of a new, streamlined framework that follows HM Treasury’s planned repeal of the UK Markets in Financial Instruments Regulation (MiFIR) transaction reporting legislation.

The consultation also covers:

• the FCA’s approach to carrying across relevant parts of the transaction reporting, instrument reference data and record-keeping related Level 3 materials on its Handbook website into a new transaction reporting user pack
• provisions to give firms clarity on the transition between the current and future transaction reporting regime
• consequential amendments to its Handbook and technical standards to reflect the repeal of the relevant parts of UK MiFIR and technical standards and their replacement by MAR 13, MAR 14 and MAR 15.

The FCA will publish a further consultation on the user pack in Q1 2027, with a final version due by 3 April 2027. As the current “Level 3 materials” section of the FCA’s Handbook does not cover all reporting scenarios, the FCA is also asking where further guidance may be needed, and the responses will help shape the development of additional guidance to be included in the user pack. The deadline for comments on the consultation is 6 November. Alongside the consultation, the FCA published its draft schema and validation rules on the Market Data Processor webpage, to help firms prepare for the implementation of the final rules.

The EU Anti-Money Laundering Authority (AMLA) has published final draft regulatory technical standards (RTS) under Article 46(4) of the Sixth Anti-Money Laundering Directive (Directive (EU) 2024/1640) (AMLD 6). The draft RTS were previously consulted on in May and establish a simple, proportionate, and efficient framework for information exchange, cross-border inquiries, and coordinated supervision. In particular, they:

• give supervisors of cross-border groups—in both the financial and non-financial sectors—a shared baseline for working together across the EU
• set out practical arrangements for effective day-to-day cooperation, including a simplified disclosure framework allowing the onward sharing of information among EU supervisors without prior consent
• enable home and host supervisors to conduct cross-border inquiries and coordinate supervisory approaches
• favour a proportionate and risk-based approach to supervisory cooperation.

The final draft RTS will be submitted to the European Commission for adoption before being published in the Official Journal of the European Union (OJ). They are expected to come into force 20 days after being published in the OJ and will apply from 10 July 2027.

The Basel Committee on Banking Supervision (BCBS) has published the summary of its latest meeting which took place on 28-29 September, in which members discussed a range of analytical, supervisory and regulatory initiatives. In the press release, the BCBS sets out the outcomes of the meeting, including:

• Digitalisation: The BCBS noted that while AI may support greater efficiency and innovation in financial services, it could also increase operational, cyber and concentration risks. It agreed that AI's integration into critical financial functions will require careful governance, robust risk management and ongoing supervisory attention. The Committee also agreed to review the sufficiency and adequacy of existing "event type" loss categories set out in the operational risk framework, with a focus on cyber risk and AI developments. It will continue to monitor AI developments and discuss supervisory implications.
• Pillar 3 disclosures: Following its consultation on machine-readable Pillar 3 disclosures, the BCBS approved a final standard to provide for an innovative and efficient channel of bank disclosures. The final standard will be published around the end of the year.
• Cryptoassets: The Committee is reviewing targeted elements of its prudential standard for banks' exposures to cryptoassets, and expects to provide an update by the end of the year.
• Global systemically important banks (G-SIBs): The BCBS approved the results of the end-2025 assessment exercise under its G-SIBs framework. The results will be submitted to the Financial Stability Board before it publishes the 2026 list of G-SIBs. The BCBS also approved revisions to the G-SIB assessment framework to reduce "window-dressing" behaviour by banks following an earlier consultation. The revisions will be published later this month. In addition, it agreed to publish an update to its methodology for comment on whether to incorporate the treatment of cross-border exposures within the European banking union in the G-SIB framework. The consultation will also be published later this month.
• Interest rate risk in the banking book (IRRBB): The Committee agreed to consult on additional Pillar 2 guidance for banks and supervisors to strengthen implementation of the IRRBB framework. The consultation will be published next month.
• Liquidity: The BCBS is assessing targeted updates to its Principles for Sound Liquidity Risk Management and Supervision, which were published in September 2008. An update on this work will be provided later this year.

The UK Office of Financial Sanctions Implementation (OFSI) has published its annual frozen assets reporting notice alongside a reporting template, launching its 2026 review of frozen assets held under UK financial sanctions regimes. Persons holding or controlling funds or economic resources owned, held, or controlled by designated persons are required to submit a report to OFSI by 30 November, covering the value of relevant frozen assets as at the close of business on 30 September. The reporting obligation extends to assets held in the UK as well as those overseas where they are subject to UK financial sanctions legislation. The notice also reminds firms of their ongoing obligations to identify and freeze assets belonging to designated persons (and entities they own or control), report newly frozen assets to OFSI without delay, and provide information requested by OFSI.

The Annex to the notice provides a general description of the information to be reported. All returns must be submitted using the prescribed template. OFSI states that there is no requirement to submit a nil return where a person does not hold or control any funds or economic resources owned, held, or controlled by a designated person. However, if a person submitted a report last year (other than a nil return) and no longer holds those assets, they should submit a nil return.

The Bank of England (BoE) has published the record of the Financial Policy Committee's (FPC) meeting held on 25 September. The headline judgements and policy actions from the meeting include:

• The likelihood of interconnected vulnerabilities in the financial system crystallising has risen since the FPC's previous meeting. The re-escalation of the conflict in the Middle East has renewed uncertainty around growth and the path of interest rates in a number of advanced economies, re-intensifying the risk that vulnerabilities in sovereign debt markets, risky asset valuations, and risky credit markets crystallise at the same time.
• The rapid increase in AI-related debt issuance broadens the exposure of capital markets to developments in AI. In addition, recent frontier AI incidents have heightened concerns about the pace of AI development and related cyber and operational risks. The FPC stresses the importance of managing these increasingly interconnected risks in a timely and prudent manner.
• Risky credit markets, including parts of private credit, remain vulnerable to a tightening in financing conditions. It notes the importance of the private markets system-wide exploratory scenario in filling data gaps.
• Households and corporates remain resilient, and the UK banking system remains appropriately capitalised with high levels of liquidity.
• The FPC has decided to maintain the UK countercyclical capital buffer rate at its neutral setting of 2%.
• The Committee has agreed to proceed with the proposed leverage ratio reforms as set out in the July financial stability in focus report, which the BoE expects to consult on in early 2027. This increases the importance of continuing to develop and implement measures to improve the resilience of the gilt repo market. If, in future, the Committee were to judge that risks were heightened and that additional resilience was warranted, it would consider increasing the general leverage ratio buffer above 25 basis points.
• The most material climate-related channels to UK financial stability are the potential long-run impacts of climate change on sovereign debt pressures globally. The analysis behind this will be published in a forthcoming BoE Insights article.

Separately, the BoE published its systemic risk survey results for H2 2026 to quantify participants' views of risks to, and their confidence in, the stability of the UK financial system.