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 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 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 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 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.

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 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 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 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 are 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 Bank of England (BoE) has published an insights article by Andrew Bailey, Governor of the BoE, on frontier AI and the question of governance. Mr Bailey argues that while the risks are real and increasingly significant, policymakers should not automatically turn to the questions of regulation. Instead, they should first ask what precisely the problem is that they are trying to solve. In his view, the challenge posed by frontier AI is that, in its most advanced forms, it threatens to operate outside society's framework of shared norms. A sufficiently powerful system functioning within a self-reinforcing loop risks reducing society's ability to exercise meaningful oversight and intervention. He is clear that this does not mean prohibiting frontier AI, whose potential benefits include driving scientific discovery, enhancing productivity and contributing to economic prosperity. However, society must retain the ability to intervene, to establish the boundaries within which these systems operate, and to revise those boundaries as the technology evolves.

Mr Bailey identifies rigorous model testing, conducted before and after deployment, as a sensible starting point. He notes that the UK's AI Security Institute is helping to develop the scientific and technical foundations of AI assurance, although the pace of progress must accelerate. In his view, testing should not be seen as an alternative to future regulation, nor as a complete solution. A more formal regulatory framework may well emerge over time, but understanding, testing, and establishing credible points of intervention must come first. Mr Bailey also links these issues to financial stability. He warns that frontier AI materially increases the scale and sophistication of cyber-threats facing the financial system, and that the resilience of payments networks, financial market infrastructures and banks can no longer be considered separately from AI advances. Rigorously testing the models that firms use will help to show how AI can be deployed safely. In time, that understanding could be codified into standards to ensure a consistent approach across the financial system.

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.

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 UK Financial Conduct Authority (FCA) has published Primary Market Bulletin 66 (PMB 66) covering developments relevant to primary market participants. The bulletin finalises technical note (TN) 619.3, which contains guidelines on disclosure requirements under the Prospectus Rules: Admission to Trading on a Regulated Market (PRM) and guidance on specialist issuers. It also makes consequential amendments to TN 321.5 on working capital statements and risk factors, following consultation in PMB 63. The updated guidelines aim to provide flexibility so that a clean working capital statement may be given where directors judge that certain uncommitted facilities can be considered available for the entirety of the working capital period, with appropriate disclosure alongside the working capital statement in the prospectus.

In PMB 66, the FCA also consults on a new proposed TN 803.1, which will set out the FCA's expectations for issuers under the new sustainability disclosure requirements and replace the existing UK Listing Rules guidance in TN 801.4. The rest of TN 801.4 will remain in force. TN 803.1 will also replace TN 802.3 in full. The deadline for responses is 28 October, and the FCA intends to finalise the guidance before the new rules take effect in January 2027. The FCA also sets out a list of its expectations to help listed companies prepare for the new requirements. Further details of the final sustainability disclosure rules are covered separately here.

PMB 66 also sets out the FCA's observations on disclosing inside information relating to cyber incidents. These were drawn from discussions the FCA held with issuers and their advisers. The FCA's observations also address disclosures relating to the discovery of historical systems compromise, delaying disclosure, making subsequent disclosures, and sharing inside information with authorities. For more detail, you may wish to read our blog post titled "When a cyber incident becomes inside information – new observations from the UK FCA".

The UK Financial Conduct Authority (FCA) has published finalised non-Handbook guidance relating to the overall risk assessment requirements under the new prudential framework for regulated cryptoasset firms. This includes:

• Non-Handbook guidance on COREPRU 7: Overall risk assessment (FG26/9), which sets out the FCA's expectations for firms on completing the overall risk assessment required under the new Core Prudential sourcebook (COREPRU). The guidance explains how firms can link their business model, risk appetite, financial resource planning, and wind-down planning into one coherent process. It considers how firms should complete the overall risk assessment, the documentation, and how the risk assessment interacts with the FCA's Supervisory Review and Evaluation Process.
• Non-Handbook Guidance on CRYPTOPRU 7: Overall risk assessment for CRYPTOPRU firms (FG26/10), which sets out the FCA's expectations for firms on completing the overall risk assessment required under the new Prudential sourcebook for CRYPTOPRU firms (CRYPTOPRU). It is intended to help firms develop their own assessments, calculate financial resource requirements, and understand the implications of their wind-down plans.

Both sets of guidance will come into force on 25 October 2027, when the new UK crypto regime comes into force.

The EU Anti-Money Laundering Authority (AMLA) has published three sets of final draft regulatory technical standards (RTS) defining key measures companies and professionals must apply to reduce anti-money laundering and countering terrorist financing (AML/CTF) under the EU AML Regulation ((EU) 2024/1624) (AMLR). For more background on the package, you may like to read our article "AML playbook: the new EU AML/CTF package". The three final draft RTS each cover a distinct area of AML/CTF requirements for the private sector:

• Draft RTS on group-wide minimum requirements and additional measures for subsidiaries and branches in third countries under Articles 16(4) and 17(3) of the AMLR. They are accompanied by two fact sheets covering group-wide requirements and legal impediments in third countries. The RTS set out minimum requirements for effective group-wide AML/CTF arrangements, including governance, risk management, internal controls, and secure information sharing. The RTS were previously consulted on in April.
• Draft RTS on customer due diligence (CDD) under Article 28(1) of the AMLR. They specify in detail how CDD requirements should be applied, including the information and documents to be collected. The RTS are accompanied by a fact sheet. They were previously consulted on in February.
• Draft RTS on criteria for identifying business relationships, occasional transactions and linked transactions as well as lower thresholds under Article 19(9) of the AMLR. They form the structural basis upon which CDD obligations apply. The RTS set out how companies and professionals should distinguish between the business relationships and occasional transactions, as well as how to identify linked transactions so that CDD thresholds are applied consistently. The RTS are accompanied by a fact sheet. They were previously consulted on in February and AMLA has made some revisions to improve clarity.

The final draft RTS will be submitted to the European Commission for adoption. Once adopted, they will be published in the Official Journal of the European Union and come into force 20 days later. They are expected to apply six months after they enter into force, except for specified provisions which will apply from 10 July 2029.

The European Banking Authority (EBA) has published its work programme, setting out its key areas of focus and deliverables for 2027. The work programme is structured around three cost-cutting drivers: improving efficiency, fostering resilience and supporting transformation. Key areas of focus include:

• completing the implementation of the EU's 2024 banking package
• implementing the new payment services framework
• supporting crisis management and deposit insurance reforms
• contributing to the Savings and Investments Union (SIU) and the legislative proposals for the revised securitisation framework
• implementing a new supervisory convergence framework
• enhancing stress testing and simulation capacity
• advancing integrated reporting and data sharing
• strengthening internal governance and IT resilience
• continuing work under the Digital Operational Resilience Act (DORA), the Markets in Crypto-Assets Regulation (MiCAR) and the European Market Infrastructure Regulation (EMIR).

The EBA also highlights its commitment to regulatory simplification, proportionality, and reducing unnecessary reporting and compliance burdens, in support of the European Commission's banking competitiveness agenda. Chapter 2 of the work programme provides detailed descriptions of the specific activities that the EBA intends to undertake in 2027, including the timings of those activities.

The UK Financial Conduct Authority (FCA) has published policy statement PS26/19, setting out its final rules to align listed issuers' sustainability and climate disclosures with UK Sustainability Reporting Standards (UK SRS), the UK-endorsed version of the International Sustainability Standards Board (ISSB) Standards. The final rules adopt a comply or explain approach across the UK SRS. The rules will replace the existing Task Force on Climate-related Financial Disclosures (TCFD)-aligned disclosures. Following feedback from the January consultation, the FCA has simplified the regime in two ways by requiring:

• a comply or explain approach across all categories of disclosures, bringing UK SRS S2 (climate disclosures) into line with the approach it consulted on for UK SRS S1 (non-climate disclosures) and Scope 3 (emissions data)
• international commercial companies with a secondary listing and depositary receipt issuers to also report against UK SRS on a comply or explain basis, in place of the consultation proposal to signpost any reporting requirements and disclosures under their home jurisdiction.

To support companies to apply the comply or explain rules, the FCA is also consulting on technical note (TN) 803.1 and related updates to existing technical guidance under TN 801.4, and the proposed deletion of TN 802.3. The proposals are outlined in the FCA's Primary Market Bulletin (PMB) 66. We cover PMB 66 separately in the Securities section above. The deadline for comments is 28 October and the FCA aims to finalise the guidance before the rules come into force.

The new rules will apply to accounting periods beginning on or after 1 January 2027, with first reporting due in 2028. Transitional reliefs will apply for one year for Scope 3 emissions disclosures and for two years for UK SRS S1 disclosures. The FCA also published some practical considerations in PMB 66 to support companies. The FCA also intends to organise a series of activities to help companies and investors understand the UK SRS and what is required under the rules.

The UK Prudential Regulation Authority (PRA) has issued a Dear CFO Letter setting out thematic feedback from its annual review of written auditor reports of selected PRA-regulated deposit-takers, covering IFRS 9 expected credit loss (ECL) and accounting for climate risk. The PRA confirms that it has seen continuous improvements in firms' capabilities, controls, and governance in these areas.

The feedback covers:

• Data governance, where the PRA encourages continued enhancements in identifying material ECL data, and strengthening end-to-end accountability, data quality controls, and data lineage.
• Model risk, where the focus is on firms' responsiveness to emerging risks, the completeness of post- model adjustments, and ensuring model monitoring continues to support timely identification of model performance issues and mitigating actions.
• Climate risk, where the PRA encourages continued development of more granular risk assessments, stronger links between scenario analysis and ECL judgements, and the models and data to assess and reflect evolving climate-related credit risks.

Firms are encouraged to review the Annex to the letter, which sets out a range of practices observed by the PRA, together with its areas of focus. The PRA has requested auditors' views on firms' progress in these areas for the 2027 review. Auditors are also asked to report on firms' processes for identifying and monitoring credit risk in private market exposures and for reflecting changes in ECL in a timely manner.

The European Securities and Markets Authority (ESMA) has responded to the European Commission's consultation on the review of the Markets in Crypto-Assets Regulation (MiCAR). The targeted consultation contained technical and legal questions on whether MiCAR remains fit for purpose in light of evolving market and international developments. ESMA's recommendations aim to simplify the framework while improving investor protection and addressing innovative business models, such as decentralised finance (DeFi), staking, lending, and borrowing. ESMA's proposals include:

• Enhancing investor protection: New safeguards in areas where investors face risks that are not fully covered under the current framework. This includes: (i) stricter rules for the marketing of cryptoassets; (ii) greater transparency in costs; and (iii) proportionate requirements for staking, lending, and borrowing, including through disclosure obligations.
• Reinforcing supervision: Strengthening supervisory powers and addressing the risks arising from unauthorised services, online fraud, and non-compliant stablecoins by: (i) enhancing the EU's capacity to detect, block and deactivate fraudulent websites and freeze cryptoassets in cases of suspicion of market abuse or terrorist financing; (ii) obtaining reinforced supervisory powers to deal with third-country firms which solicit EU investors without being authorised under MiCAR; and (iii) introducing explicit rules to prevent regulated crypto firms from offering services linked to stablecoins that do not comply with MiCAR requirements.
• Evolving towards DeFi and improving cryptoasset classification: Introducing clearer criteria for identifying which activities can be considered genuinely decentralised, as activity around DeFi and stablecoins evolves. It also proposes a new regulated cryptoasset service for firms that provide users with access to DeFi protocols, adopting rules on how cryptoassets should be classified (including hybrid tokens), and granting powers to ESMA to issue binding opinions on token classification to promote the consistent treatment of products across the EU.
• Simplification and burden reduction: Streamlining parts of the existing rules, including simplifying cryptoasset white-paper notification procedures, reducing duplicative authorisation requirements for some regulated firms, and improving the consistency of prudential requirements.

Beyond the immediate MiCAR review, ESMA also highlights the need for a framework for tokenised securities and on-chain settlement that can support the development of an integrated European tokenised capital market and facilitate cross-border activity in the future.

The European Securities and Markets Authority (ESMA) has published its 2027 work programme, setting out its priorities for strengthening, simplifying and integrating EU capital markets. It marks a decisive shift from analysis and groundwork to implementation and concrete delivery, building on the foundations laid in 2025 and 2026 and bringing key strategic cycles to completion. Key areas of work for 2027 include:

• Growing supervisory mandates: ESMA will advance its supervision of consolidated tape providers and external reviewers of European Green Bonds, and will process the applications and begin the supervision of environmental, social and governance (ESG) rating providers. ESMA will also adapt to its expanded responsibilities for benchmark administrators. It will carry out oversight of critical ICT third-party service providers and continue monitoring and promoting compliance with the Digital Operational Resilience Act (DORA) across all of its supervisory mandates. ESMA will also review the impact of EMIR 3 reforms and continue cooperation with national competent authorities, including on the supervision of cryptoasset service providers under the Markets in Crypto-Assets Regulation (MiCAR).
• Delivering more efficient financial markets: ESMA will prepare for changes to its mandates and responsibilities arising from the proposed Market Integration and Supervision Package (MISP), and support implementation of the European Single Access Point and the transition to T+1 settlement. It will also continue work on investor protection by supporting the implementation of the Retail Investment Strategy and promoting clear, accessible information for investors. ESMA has also stated that its simplification initiatives on transaction reporting, funds reporting, the retail investor journey and risk-based supervision will enter a new phase in 2027.
• Harnessing data and technological innovation: ESMA will further enhance its use of data and technology, including AI-based supervisory tools. It will also strengthen cybersecurity capabilities and continue its work on cryptoassets and the impact of AI on financial markets. Tokenisation will also remain a priority.

The Financial Markets Standards Board (FMSB) has published an updated version of its standard for sharing of standard settlement instructions (SSIs), together with updated SSI templates. The standard aims to increase the adoption of electronic solutions that allow for standardisation and pre-authentication of settlement instructions, and facilitate straight-through processing, to improve the efficiency of SSI management by recipient counterparties and reduce settlement fails through incorrect SSIs. It sets out nine core principles relevant to the sharing of SSIs, covering: use of industry platforms; off-platform; timing; data fields; data format; data validation; validity; governance and responsibility; and periodic review. Where such electronic solutions are not legally or operationally feasible, the standard provides templates for the manual sharing of SSIs.

Updated FAQs published alongside the updated standard and templates acknowledge that it may not always be possible to comply with the standard in all circumstances and at all times in core principle 9 (periodic review). There is an explicit carve-out for automation for sharing of SSIs where it is not "legally or operationally feasible", and for clarity purposes, the FMSB has now introduced a similar carve-out in core principle 2 (off-platform) for non-use of the template. The FAQs provide the following examples of situations under core principle 2 to which this carve-out may apply:

• Markets which require a local broker and/or custodian to access, where use of the template is not accepted by those actors.
• Markets in which regulations around data transmission and/or storage may prohibit the use of the template.
• Markets in which a regulator, market infrastructure, custodian or local agent mandates a specific form, format, or submission channel that is fundamentally incompatible with the FMSB template.

The FAQs also state that any exemption should be based on a genuine and documented legal or operational constraint, rather than local preference and should be reviewed at least annually as per core principle 9. Additionally, the FAQs confirm that the standard and templates have been recognised by both the EU Industry Committee for T+1 and the UK Accelerated Settlement Taskforce as supporting more efficient settlement processes, particularly in light of the planned move to T+1 settlement in the UK and EU in 2027.

The UK Financial Conduct Authority (FCA) has published Handbook Notice No. 144, outlining amendments to its Handbook made by various instruments including:

• Markets in Financial Instruments (Record Keeping, Transaction Reporting and Financial Instrument Reference Data) Instrument 2026, which comes into force on 3 April 2028. The instrument makes changes to the scope, content and operation of the transaction reporting regime. The changes aim to simplify firms' reporting obligations, reduce duplicative or low-value reporting and improve consistency in how key fields are populated.
• Changes to Information Flows for UK Equity IPOs Instrument 2026, which came into force on 5 August. This instrument updates the FCA's rules on information sharing during UK equity initial public offerings (IPOs) to reduce market risk and frictions in the UK IPO process for issuers and market participants.
• Collective Investment Schemes Sourcebook (Liquidity Management) Instrument 2026, which comes into force on 1 February 2027. Introduced following the consultation published in CP25/38, the instrument makes targeted improvements to the liquidity risk management framework for authorised fund managers (AFMs) of UK Undertakings for Collective Investment in Transferable Securities (UCITS) schemes and non-UCITS retail schemes. The changes promote the effective use of antidilution tools, clarify good practice for AFMs' assessment of the liquidity of securities held in funds, and introduce new guidance on stress testing.
• Perimeter Guidance (Regulated Cryptoasset Activities) Instrument 2026. Part 1 of Annex B of this instrument came into force on 16 September, with the remainder coming into force on 25 October 2027. It sets out perimeter guidance for the UK's future cryptoasset regime, helping firms understand when authorisations for cryptoasset activities will be required.
• Collective Investment Schemes Sourcebook (Cryptoasset Exchange Traded Note) Instrument 2026, which came into force on 28 September. Introduced following the consultation published in chapter 5 of CP26/17, the instrument allows certain authorised funds to hold cryptoasset exchange traded notes, subject to a limit of 10% of scheme property for retail funds.
• Cryptoasset Activities (Periodic and Application Fees) Instrument 2026, which came into force on 30 September, with Part 2 of the annex coming into force on 25 October 2027. This instrument sets out the application fees and periodic fees that firms with cryptoasset regulated activities permissions will pay to fund the FCA and the UK Financial Ombudsman Service.
• Disclosure of Climate-Related Financial Information (Asset Manager and Asset Owner) (Amendment) Instrument 2026, which came into force on 25 September. This instrument simplifies the FCA's Task Force on Climate-related Financial Disclosures product-level reporting requirements for asset managers, life insurers and FCA-regulated pension providers in the ESG sourcebook. It introduces more targeted climate disclosure rules that reduce complexity and burden for firms, while improving the clarity and usability of climate information for investors.
• Financial Promotion (Notification of Cryptoasset Approval) Instrument 2026, which came into force on 1 October. Introduced following the consultation published in chapter 6 of CP26/17, the instrument removes the requirement to submit notifications for most approvals of cryptoasset promotions, reducing the burden on both firms and the FCA.
• Decision Procedure and Penalties Manual (Cryptoassets) (Amendment) Instrument 2026. Part 1 of Annex B came into force on 30 September, with the remainder coming into force on 25 October 2027. Introduced following the consultation published in CP26/19, the instrument makes minor and consequential amendments to the Decision Procedure and Penalties Manual and the Glossary arising from the introduction of the market abuse regime for cryptoassets. The amendments apply the FCA's existing market abuse penalty framework to cryptoasset market abuse and identify the FCA decision-makers responsible for exercising powers under the transitional provisions of the Cryptoassets Regulations.
• Data Decommissioning (No 2) Instrument 2026, which came into force on 1 October. This instrument simplifies the scheduling rule for Section M of the Retail Mediation Activity Return and clarifies guidance notes for firms completing the FIN073 return.
• Pensions Projections Exemption Instrument 2026 and Conduct of Business (Interactive Pension Simulations) Instrument 2026, both of which came into force on 25 September.

Feedback for the various consultations behind the Handbook Notice is set out in chapter 3 of the notice.

The European Banking Authority (EBA) has launched a consultation on proposed revisions to its implementing technical standards (ITS) governing the joint decision process for institution-specific capital and liquidity requirements under Article 113 of the Capital Requirements Directive 2013/36/EU (CRD), as amended by Directive 2024/1619 (CRD VI). Article 113 of the CRD establishes the framework for joint decisions within supervisory colleges on institution specific prudential requirements for cross border banking groups. Since the ITS were first adopted in 2014, the prudential and supervisory framework has evolved significantly, including through changes introduced by CRD V (Directive (EU) 2019/878), which extended joint decisions to cover Pillar 2 guidance and leverage ratio-related elements. Changes were also introduced by the revised EBA Guidelines on the Supervisory Review and Evaluation Process (SREP). The EBA is proposing a comprehensive revision to streamline the joint decision process, simplify templates and better align the framework with current supervisory practice.

Key proposals include:

• supporting a more holistic and coordinated assessment of institutions' prudential requirements and guidance
• streamlining and simplifying templates, by introducing a single, reduced and integrated risk assessment report
• aligning the joint decision process with the revised SREP framework and current supervisory practices
• more clearly incorporating qualitative supervisory measures into the joint decision process
• updating the scope of joint decisions to include Pillar 2 guidance and leverage ratio-related Pillar 2 requirements and guidance.

The deadline for comments is 4 January 2027.

The European Commission (EC) has published a letter (dated 21 September) to the European Supervisory Authorities (ESAs), inviting them to deliver technical advice on private credit activities and exposures of EU banks and non-bank financial institutions (NBFIs). The letter enclosed a call for technical advice, which sets out the context for the invitation and notes the recent rapid growth of the private credit sector, the advantages offered by its customisability, the link between private equity and private credit activities, and the link between banks and NBFIs which needs to be better understood.

The EC have scoped the advice to cover the following four areas:

• Lending and investment exposure of EU banks and NBFIs to private credit activities.
• Gaps in the existing reporting framework.
• Retail investor participation.
• Mapping the interconnection between banks and NBFIs.

The advice should consider direct lending and investment in private credit funds or private credit instruments, and the EC has requested that the ESAs focus on unsecured direct lending to private companies and individuals in particular. EU banks and EU NBFIs are in scope, as well as non-EU subsidiaries. The data which should be used for producing this advice should be limited to data from regulatory reporting and/or commercial data sets.

The EC invites the ESAs to set up a task force to discuss and agree the technical specification in the call for advice which relates to common definitions, data management and processing (among other things) with the participation of the other European regulatory authorities. In terms of the expected timetable, the EC invites the report to be delivered within six months from the date of receipt of the call for advice, if possible.