The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
-
ESMA publishes overview of planned consultations for 2025
13 March 2025
The European Securities and Markets Authority has published an overview of its planned consultations for 2025. The consultations relate to workstreams under the EU Listing Act, the Markets in Financial Instruments package, the latest European Market Infrastructure Regulation (known as EMIR 3), the review of the Alternative Investment Fund Managers Directive, sustainable finance and investor protection. ESMA states that it will update the list regularly. -
IOSCO publishes consultation report on neo-brokers
13 March 2025
The International Organization of Securities Commissions (IOSCO) has published a consultation report on neo-brokers, a subset of brokers which provide online-only investment services and do not operate physical branches. Neo-brokers rely on technology to facilitate their services, mainly providing access via mobile apps and websites, and have very limited or no human interaction with their retail customers. They have grown in recent years.
The consultation report sets out a series of findings from IOSCO members who reported on the activities of neo-brokers in their jurisdictions and also includes recommendations which member jurisdictions may consider applying. Two areas which require specific action are the potential risks of conflicts of interest, mainly due to business models inducing retail clients to trade more frequently and the need for solid IT infrastructure, given neo-brokers' online-only business models. The report lists a series of questions upon which feedback is welcomed, as well as any more general comments respondents may have on the proposed guidance in the report. Responses should be submitted on or before 12 May.Topic : Securities -
BCBS provides an update on upcoming workstreams
13 March 2025
The Basel Committee on Banking Supervision (BCBS) has published a press release providing an update on its workstreams. The BCBS states that it will publish by mid-2025 an update on the outcome of its work to prepare a suite of practical tools to support supervisors in their day-to-day work, taking into account the lessons learned from the 2023 banking turmoil. The BCBS has also committed to analysing recent developments and global practices on banks' information and communication technology risk management. The Committee plans to publish a range of practices report covering its findings in 2026. As part of the BCBS's work relating to non-bank financial intermediaries (NBFIs), the BCBS states that it will conduct a comprehensive investigation into the synthetic risk transfers from banks to NBFIs to provide an enhanced understanding of the risks and benefits of these products and the evolving nature of the transaction structures.Topic : Prudential Regulation -
FCA drops contentious proposals on enforcement publication
12 March 2025
The Financial Conduct Authority (FCA) has published a letter (dated 11 March) to the Treasury Select Committee providing an update on the FCA's approach to enforcement and diversity and inclusion proposals.
Following the FCA's second consultation on proposals for publication of enforcement measures, the FCA has decided not to proceed with all of its proposals. In particular, the FCA will not be publicising its investigations of firms at an earlier stage if there is a public interest. The FCA has taken this decision in response to the significant concerns raised by industry and the government. The FCA will be taking forward other proposed changes to its approach to enforcement, including reactively confirming investigations officially announced by firms or other regulators, issuing public notices on possible unlawful activities of unregulated and regulated firms, which should improve consumer protection, and publishing more detail of issues under investigation in anonymised form, potentially introducing an "Enforcement Watch" bulletin. The FCA intends to publish its final policy by the end of June.
The FCA also confirms that the Prudential Regulation Authority (PRA) and the FCA will not be taking forward at this time their plans to bring in final rules on diversity and inclusion in the financial sector (in response to their 2023 consultations). As noted in the FCA's related statement, this decision has been taken in response to the feedback the regulators have received, expected legislative developments in the area and so as to avoid imposing additional burdens on firms. -
IOSCO publishes 2025 Work Program
12 March 2025
The International Organization of Securities Commissions (IOSCO) has published its 2025 Work Program, setting out its ongoing and planned initiatives for 2025. These include: (i) prioritising issues related to non-bank financial intermediation; (ii) developing measures to mitigate risks associated with pre-hedging practices employed by market intermediaries; (iii) conducting a series of targeted actions to tackle new risks to retail investors, including imitative and copy trading, poor digital engagement practices and finfluencer activities; (iv) launching a pilot crypto and digital assets implementation monitoring initiative to understand policy implementation among IOSCO member jurisdictions; (v) continuing work to strengthen the operational resilience of financial market infrastructures; and (vi) assisting with capacity building for jurisdictions that are seeking to adopt or apply the International Sustainability Standards Board standards, as well as those seeking to develop carbon markets in their jurisdictions.Topic : Securities -
EU amending technical standards published for specifying the data collection for the 2025 benchmarking exercise
12 March 2025
The Commission Implementing Regulation (EU) 2025/379 has been published in the Official Journal of the European Union. The EU Capital Requirements Directive requires competent authorities to conduct an annual assessment of the quality of internal approaches used for the calculation of own funds requirements. To assist competent authorities in this assessment, the European Banking Authority calculates and distributes benchmark values to competent authorities that allows a comparison of individual institutions' risk parameters. These benchmark values are based on data submitted by institutions as laid out in Commission Implementing Regulation (EU) 2016/2070 which specifies the benchmarking portfolios, templates, and definitions to be used as part of the annual benchmarking exercises. Commission Implementing Regulation (EU) 2025/379 amends the implementing technical standards set out in Implementing Regulation (EU) 2016/2070, replacing the existing annexes IV, V, VI, VII, and X. It will enter into force on 1 April.Topic : Prudential Regulation -
IOSCO publishes consultation report on AI in capital markets
12 March 2025
The International Organization of Securities Commissions (IOSCO) has published a consultation report on the use cases, risks and challenges of AI in capital markets. The report, which is based on feedback from IOSCO's members and industry participants, discusses: (i) AI use cases in capital markets (which have evolved since IOSCO's 2021 AI report); (ii) risks, issues, and challenges related to investor protection, market integrity, and financial stability arising from AI; and (iii) steps that market participants have taken to manage risks and govern development and deployment of AI systems.
Key findings of the report include that firms are increasingly using AI to support decision-making processes (e.g., robo-advising and algorithmic trading) as well as for internal operations and processes. Commonly cited risks include malicious use of AI, concentration, outsourcing, and third-party dependency and risks arising from interactions between humans and AI systems, including a lack of accountability, insufficient oversight, and over-reliance on technology for decision-making. The report also discusses the varied regulatory responses to AI, with some regulators applying existing regulatory frameworks and others developing new frameworks to address the unique challenges posed by AI.
IOSCO is now inviting feedback on the content of the report and other potential areas of focus to inform its approach to developing tools which may help regulators combat the risks of AI in the future. Comments may be submitted on or before 11 April.Topic : Artificial Intelligence -
FCA statement on sustainability regulations and UK defence
11 March 2025
The UK Financial Conduct Authority (FCA) has published a statement confirming that there is nothing in its rules, including its sustainability rules, that prevents investment in or finance for defence companies. The FCA confirms that it is up to individual lenders and investors whether they provide capital to defence companies.
The FCA's sustainability-related rules and regulations include: (i) its Sustainability Disclosure Requirements (SDR), including rules on investment labels for asset managers, and an anti-greenwashing rule applicable to all FCA-authorised firms; (ii) disclosure rules for listed issuers, asset managers and asset owners aligned with the Taskforce on Climate-related Financial Disclosures standards; and (iii) its proposed adoption of the International Sustainability Standards Board's standards in the UK. HM Treasury is also consulting on the proposed regulatory regime for ESG ratings providers. None of these rules require financial institutions to treat companies differently because they are in the defence sector.Topic : Sustainable Finance -
PSR publishes policy statement on 2024 APP scams data
11 March 2025
The UK Payment Systems Regulator (PSR) has published a policy statement outlining its approach to publishing authorised push payment (APP) scams data for 2024.
In 2025, the PSR will take a different approach to publishing the data, following the introduction of the reimbursement requirement on 7 October 2024, which ensures victims of APP scams are reimbursed in all but exceptional cases. As a result, the PSR is planning to publish two separate data updates for 2024, as data before and after the policy took effect cannot be directly compared. The first report will cover APP scams where the fraudulent transaction took place over Faster Payments before 7 October 2024 and the case was closed between 1 January and 31 December 2024. The second report will cover APP scams where the fraudulent transaction took place after 7 October 2024 and the case was closed between 7 October and 31 December 2024.
The PSR also confirms that it intends to publish a call for views in Spring 2025 to ensure that its future reporting aligns with consumer needs, regulatory requirements and its commitment to transparency. Considerations will include whether the PSR reports at the firm or industry level, the frequency of future reporting and the potential inclusion of additional metrics. -
FCA statement on motor finance review next steps
11 March 2025
The UK Financial Conduct Authority (FCA) has published a statement informing firms, consumers and stakeholders of next steps in its review of the past use of motor finance discretionary commission arrangements.
The Court of Appeal handed down its judgement in three related motor finance appeals on 25 October 2024, finding that there was a fiduciary relationship between the dealer and the consumer, raising the prospect of widespread liability among motor finance firms that failed properly to disclose commissions to customers. The Supreme Court will hear an appeal against the Court of Appeal's judgement on 1 to 3 April. The FCA's statement confirms that, if it concludes that motor finance customers have lost out (taking into account the Supreme Court's decision), it is likely to consult on an industry-wide redress scheme. Firms would be responsible for determining whether customers had lost out due to their failings, but the FCA would set rules that firms must follow under the scheme and introduce checks to ensure they do. The FCA will confirm within six weeks of the Supreme Court's decision whether it is proposing a redress scheme and, if so, how that would be taken forward. It may also consult separately on changes to its rules, depending on the Supreme Court's decision.Topic : Consumer / Retail -
FCA publishes review of liquidity risk management at wholesale trading firms
10 March 2025
The UK Financial Conduct Authority (FCA) has published observations on good and poor liquidity risk management practices from its multi-firm review of wholesale trading (sell-side) firms in scope of the Investment Firms Prudential Regime (IFPR). In recent years, market stress events such as the COVID pandemic, the Russia-Ukraine war, the nickel price spike and the collapse of Credit Suisse and Silicon Valley Bank have prompted liquidity shocks for some firms. The FCA has, since 2023, written to sell-side firms on multiple occasions on the subject of liquidity risk management, noting that some firms were failing to develop their own competence in the area and advising on actions firms should be taking to manage liquidity risk.
The FCA's multi-firm review covered larger sell-side firms that are prudentially supervised by the FCA and compared their approaches on liquidity risk management. The FCA has set out examples of good and poor practices in a range of areas including governance and risk culture, stress preparedness, contingency funding plans and wind-down plans, and liquidity risk management capabilities. In general, the FCA found that many firms had appropriate and proportionate approaches, but some firms were weaker with approaches not proportionate to their size and the instantaneous nature of their liquidity risks. Following its review, the FCA took action against some firms and has confirmed it will continue to give feedback and use other regulatory tools where it finds firms are not properly managing liquidity risks. Firms are encouraged to use the good and poor practices identified in the review to improve their liquidity risk management capabilities. The FCA also plans to organise workshops and roundtables to share its observations.Topic : Financial Market Infrastructure -
ESAs publish guidelines on the standardised test for crypto-assets and templates for explanations and opinions under MiCAR
10 March 2025
The European Supervisory Authorities (ESAs) have published guidelines on: (i) a common approach for the regulatory classification of crypto-assets under the Markets in Crypto-asset Regulation (MiCAR); and (ii) templates for certain explanations and opinions required under MiCAR under Arts 8(4), 17(b)(ii) and 18(2)(e). The explanations and opinions relate to whether, or why, a crypto-asset or asset-referenced token should not be considered to be, either, an e-money token, a crypto-asset excluded from the scope of MiCAR or (in the case of crypto-assets) an asset-referenced token.
The guidelines apply from 12 May and national regulators, financial market participants and financial institutions must make every effort to comply with them. Within two months of publication of the guidelines on the ESAs' websites in all official languages, national regulators should inform the ESAs whether they comply or intend to comply, or otherwise their reasons for non-compliance.Topic : FinTech -
FCA and ICO letter on supporting AI, innovation and growth
10 March 2025
The UK Financial Conduct Authority (FCA) and Information Commissioner's Office (ICO) have published a joint letter recognising the importance of providing regulatory clarity to the financial services sector on the use of AI and other technologies, in ways that support innovation. A recent FCA and Bank of England survey identified data protection and the Consumer Duty as being among the key regulatory constraints to AI deployment in the financial services industry.
The FCA and ICO will host a roundtable on 9 May to discuss the challenges firms are facing in adopting AI, how the FCA and ICO can collaborate with industry to promote regulatory certainty and support growth and specific areas of data protection and financial regulation where firms need greater regulatory support in order to innovate and adopt new technologies. Notification of intention to attend the roundtable should be sent by 21 March.Topic : Artificial Intelligence -
FCA invites applications for a bond consolidated tape provider
7 March 2025
The UK Financial Conduct Authority (FCA) has published a tender notice and related tender documents for the appointment of a bond consolidated tape provider (CTP). The tender documents explain the award process and how to participate; the standards and requirements the CTP will need to meet; the licences that the successful bidder will provide to CT users; and the required information that firms must submit as part of the tender process.
Read more.Topic : Financial Market Infrastructure -
FCA publishes review of consumer support outcomes
7 March 2025
The UK Financial Conduct Authority (FCA) has published the findings of its review of firms' approaches to the consumer support outcome of the Consumer Duty. The FCA identified a range of good practices, including keeping customers' needs front and centre, proactively understanding the needs of customers, building a culture that delivers good customer support outcomes and monitoring whether customers are receiving the support they need. The FCA also identified areas for improvement, including the need to: (i) align support processes to the target market; (ii) make post-sale support as accessible and effective as pre-sale support; (iii) embed a culture that is in step with the Consumer Duty; and (iv) monitor a broader range of outcomes about effective customer support.
These findings are intended to help firms understand FCA expectations around consumer support outcomes under the Consumer Duty so that they can continue evolving their approach accordingly.Topic : Consumer / Retail -
FCA publishes findings from review of firms' treatment of vulnerable customers alongside good practice and areas for improvement
7 March 2025
The UK Financial Conduct Authority (FCA) has published the findings from its review of the treatment of customers in vulnerable circumstances. Drawing on several sources, including research commissioned by the FCA (and published for the first time with this review), the FCA has evaluated how firms are supporting vulnerable customers, as well as the appropriateness of the FCA's existing FG21/1: "Guidance for firms on the fair treatment of vulnerable customers" in light of the Consumer Duty. The FCA found that FG21/1 is still useful and important under the Consumer Duty and is not revising its guidance or introducing new requirements. It noted that the Consumer Duty had driven a renewed focus on delivering good outcomes for vulnerable customers but that some areas for improvement remain.
In response to industry feedback that more case studies would help support firms, the FCA has published a series of examples to highlight good practice and areas for improvement. Going forward, the FCA encourages firms to make use of the good practice and areas of improvement and will continue to engage with industry to support ongoing improvement especially in areas that firms find more challenging.Topic : Consumer / Retail -
ESMA notifies EC of delay of certain deliverables
6 March 2025
The European Securities and Markets Authority (ESMA) has published a letter (dated 3 March) addressed to the European Commission on the prioritisation of ESMA's 2025 deliverables. ESMA's letter sets out specific items which ESMA intends to delay or which have been cancelled. In some instances the delays are made with the purpose of aligning ESMA's work with other initiatives. For example, the technical standards on buy-in under the Central Securities Depository Regulation Review are delayed until T+1 implementation is complete. The EU has committed to moving to T+1 by 11 October 2027. ESMA identifies the following as being included in its highest priority workstreams: (i) implementation of the latest amendments to the European Market Infrastructure Regulation, known as EMIR 3; (ii) the Markets in Financial Instruments Directive and Regulation Review; (iii) the Listing Act; (iv) the Central Securities Depository Regulation Review; (v) the T+1 project; and (vi) the review of the Alternative Investment Fund Managers Directive. ESMA is also prioritising new supervisory responsibilities relating to Consolidated Tape Providers, Green Bond verifiers, ESG Rating providers and oversight powers under the Digital Operational Resilience Act. -
EBA consults on draft RTS under EU's new AML package
6 March 2025
The European Banking Authority (EBA) has published a consultation on proposed regulatory technical standards (RTS) under the EU's 2024 anti-money laundering (AML) package. The AML package consists of a Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AML Regulation), a Regulation establishing the Anti-Money Laundering Authority (AMLA) and the Sixth Money Laundering Directive (MLD6). The EBA is consulting on draft RTS that will inform its response to the European Commission's (EC's) call for advice, which it intends to submit to the EC on 31 October.
Read more.Topic : Financial Crime and Sanctions -
EC guidance on technical screening criteria published
5 March 2025
A Commission Notice was published in the Official Journal of the European Union on the interpretation and implementation of certain legal provisions of the EU Taxonomy Environmental Delegated Act, the EU Taxonomy Climate Delegated Act and the EU Taxonomy Disclosures Delegated Act. These Delegated Acts supplement the EU's Taxonomy Regulation. The Notice facilitates the effective application of these pieces of legislation by providing clarity on the existing provisions of the legislation. The notice provides technical clarifications in response to frequently asked questions (FAQs) on the: (i) technical screening criteria set out in the Taxonomy Climate Delegated Act and the Taxonomy Environmental Delegated Acts; and (ii) disclosure obligations for the non-climate environmental objectives set out in the amendments to the Taxonomy Disclosures Delegated Act. The Notice should be read with previous Commission Notices that have been published on the EU Taxonomy and its Delegated Acts.Topic : Sustainable Finance -
UK PRA consults on increasing threshold for leverage ratio framework
5 March 2025
The Prudential Regulation Authority (PRA) has opened a consultation on raising the retail deposits leverage ratio threshold from £50 billion to £70 billion. The leverage ratio applies to major UK banks, building societies and investment firms and to those firms with significant non-UK assets. The PRA sets thresholds to determine which firms are subject to the leverage ratio. The thresholds are £50 billion in retail deposits for major UK firms and £10 billion for non-UK assets for firms with significant non-UK assets. The PRA is proposing to increase the threshold for major UK firms, which was first implemented in 2016, to £70 billion to maintain the proportionality of the framework, ensure it reflects the risk appetite and does not lead to inadvertent regulatory tightening. The threshold for significant non-UK assets will remain the same as the PRA considers that it is still appropriate. Responses to the consultation may be submitted until 5 June. The PRA proposes that the implementation date for these changes would be 1 January 2026.Topic : Prudential Regulation -
EBA publishes discussion paper on EMIR fees for pro forma margin model validation
5 March 2025
The European Banking Authority (EBA) has published a discussion paper on fees to validate pro forma models under the revised European Market Infrastructure Regulation (known as EMIR 3). EMIR 3 requires that counterparties apply for authorisation to their competent authorities before using, or adopting a change to, a model for initial margin calculation used as a risk-mitigation technique for OTC derivative contracts not cleared by a CCP. The EBA is charged with establishing a central validation function for the elements and general aspects of pro forma models, and changes to those, and must charge an annual fee, per pro forma model, to counterparties using the pro forma models it validates. The EBA's discussion paper is intended to assist it in responding to a request from the European Commission for technical advice for preparing the delegated act setting out the method for the determination of the amount of the fees and the modalities of the payment of the fees.
In the discussion paper, the EBA outlines its approach to budgeting, the expected costs it will incur in carrying out this new role, expected fees per counterparty including the calculation methods and the modalities of payment. The EBA is seeking feedback on the (i) scope of the new tasks and corresponding costs; (ii) calculation of the monthly average outstanding notional amount of non-centrally cleared OTC derivatives over the past 12 months; (iii) fee calculation methods; and (iv) payment modalities. Responses to the discussion paper may be provided until 7 April. The EBA intends to provide its technical advice by 30 June.Topic : Derivatives -
UK FCA highlights areas for improvement in private market valuation processes
5 March 2025
The UK Financial Conduct Authority (FCA) has published the findings of the multi-firm assessment of valuation practices and governance for valuing private equity, venture capital, private debt and infrastructure assets. The review covered firms managing funds or providing portfolio management and/or advisory services in the UK for private equity, venture capital, private debt and infrastructure assets. The FCA found that many firms had good practices in valuation processes, including the quality of reporting to investors, documenting valuations, using third-party valuation advisers to introduce additional independence and expertise and consistent application of established valuation methodologies.
Read more. -
UK FCA reminds derivatives market participants of impending end of reporting transitional period
4 March 2025
The UK Financial Conduct Authority (FCA) has published a reminder for derivative market participants to update their outstanding derivative reports to comply with the amended reporting requirements introduced in February 2023. The UK amended its reporting requirements under the UK European Market Infrastructure Regulation. The changes took effect on 30 September 2024, subject to a transitional period which ends on 31 March. The FCA states that firms should review their reporting arrangements to ensure that they have taken the required steps to amend their outstanding derivative reports ahead of 31 March. The FCA encourages firms that do not believe that they will be able to comply to proactively engage with the regulator regarding their circumstances.Topic : Derivatives -
UK Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025
28 February 2025
The Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025 were published, alongside an explanatory memorandum. The Regulations amend the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 to allow anyone whose information could be published or disclosed by the registrar under Register of Overseas Entities (ROE) to apply to Companies House to have their information protected. The ROE was established in 2022 mainly to improve transparency regarding the beneficial ownership of overseas entities holding land in the UK. Overseas entities owning or buying property in the UK must provide information to the Registrar of companies and most of that information is publicly available. There is protection of information of those at serious risk of violence or intimidation. Prior to this amendment, only a registrable beneficial owner or managing officer could apply for protection if they, or anyone they live with, would be at serious risk of intimidation or violence if the information about them is published.
The Regulations also allow trust information that is currently not publicly available to be accessed by application if certain requirements are met. The Regulations enter into force from 28 February, except for the provisions relating to trusts which will enter into force on 31 August. Companies House has published guidance on how to apply to protect details on the ROE.Topic : Financial Crime and Sanctions -
ECB flags reliance of EU card payments on international schemes
28 February 2025
The European Central Bank (ECB) has published a report on card schemes and processors. The report provides an updated analysis of the development of card schemes and processing entities in EU member states. In the report, the ECB considers whether changing market conditions allow national card schemes to remain sustainable and considers the distribution of processors across EU countries, including the extent to which non-EU ownership may lead to EU dependence. The ECB concludes that the EU is highly reliant on non-EU solutions to operate card payments. This includes both card schemes and processors. According to the ECB, it is important for an EU solution to be developed at the point of interaction to secure operational resilience and autonomy of EU payment systems. -
EC adopts Delegated Regulations on RTS under MiCAR
27 February 2025
The European Commission has adopted a number of Commission Delegated Regulations supplementing the Markets in Crypto-Assets Regulation (MiCAR):- Commission Delegated Regulation (C(2025)1206) adopted in accordance with Article 68(10) of MiCAR prescribes the regulatory technical standards (RTS) specifying records to be kept of all cryptoasset services, activities, orders and transactions undertaken.
- Commission Delegated Regulation (C(2025)1216) adopted in accordance with Article 72(5) of MiCAR sets out RTS specifying the requirements for policies and procedures on conflicts of interest for cryptoasset service providers and the details and methodology for the content of disclosures on conflicts of interest.
- Commission Delegated Regulation (C(2025)1220) adopted in accordance with Article 32(5) of MiCAR contains RTS specifying the requirements for policies and procedures on conflicts of interest for issuers of asset-referenced tokens.
The Council of the EU and the European Parliament will now scrutinise the Delegated Regulations. If neither objects, they will be published in the Official Journal of the European Union and enter into force 20 days after publication.Topic : FinTech -
EBA opinion on EC's partial rejection of RTS on information required in application for authorisation of ARTs
27 February 2025
The European Banking Authority (EBA) has published an opinion (dated 25 February) on the European Commission's (EC's) amendments relating to the final draft regulatory technical standards (RTS) on the information to be included in the application for authorisation to offer the public and to seek admission to trading of asset-reference tokens (ARTs) under Article 18(6) of the Markets in Crypto-Assets Regulation (MiCAR). The EBA has endorsed the substantive amendments to the draft RTS submitted by the EC and has accepted the remaining changes on other parts that are not considered substantive.
The EBA also published a letter to the EC setting out its intention to accept the changes but inviting the EC to consider amending the Level 1 text at the next available opportunity, to include certain elements that were set out in the draft RTS, given their importance from a supervisory perspective. In particular, the EBA suggest that the EC amend MiCAR to address the requirements of (i) a market abuse policy; (ii) an independent third-party audit about the issuer's proprietary DLT that is operated by the issuer or by a third-party operator; and (iii) a notion of good repute aligned with the rest of the financial sector.Topic : FinTech -
UK FCA speech on supporting economic growth
27 February 2025
The UK Financial Conduct Authority (FCA) has published a speech by Nikhil Rathi, chief executive, on supporting economic growth. Mr Rathi notes that from 27 February, the FCA no longer expects firms to have a consumer duty board champion, meaning boards can decide for themselves whether or not to have one. To reflect the same, the FCA has also updated its webpage on consumer duty information for firms. Separately, the FCA will move efficiently on the 50 or so growth proposals it made to the Prime Minister its response to the call to support growth. The FCA will also focus on their joint Call for Input with the Financial Ombudsman Service published in November 2024 on how complaints and redress mechanisms work, by reviewing the framework to ensure even tighter alignment, and clearer early warnings when significant issues are emerging.
Read more.Topic : Consumer / Retail -
ESMA guidelines on maintenance of systems and security access protocols under MiCAR
26 February 2025
The European Securities and Markets Authority (ESMA) has published official translations of the guidelines on the maintenance of systems and security access protocols for offerors and persons seeking admission to trading of cryptoassets other than asset referenced tokens (ARTs) and e-money tokens (EMTs). The guidelines apply to competent authorities and to 'offerors' as defined in Article 3(1)(13) of the Markets in Crypto-Assets Regulation (MiCAR) and persons seeking admission to trading of cryptoassets other than ARTs or EMTs in relation to Article 14(1), point (d), of MiCAR.
The purpose of these guidelines is to specify the appropriate standards for offerors and persons seeking admission to trading who are not subject to the same operational resilience under MiCAR and the Digital Operational Resilience Regulation as their cryptoasset service provider and issuer counterparts. The guidelines include discussion of: (i) the general principle on proportionality; (ii) administrative arrangements and roles and responsibilities concerning systems and security access protocols; (iii) physical security access protocols; (iv) security access protocols for network and information systems; and (v) cryptographic key management.
The guidelines will apply from 27 April. National competent authorities must notify ESMA by 26 April whether they comply, do not comply but intend to comply or do not intend to comply with the guidelines. Offerors and persons seeking admission to trading are not required to report whether they comply with the guidelines. -
FATF consultation on complex proliferation financing and sanctions evasion schemes
26 February 2025
The Financial Action Task Force (FATF) has published a consultation aimed at improving country and private sector understanding of current proliferation financing (PF) risks. This study will detail the evasion techniques used by those evading the targeted financial sanctions detailed in Recommendation 7 of the FATF Standards, as well as other national and supranational sanctions that are not covered by the FATF Standards. The resulting report will focus on providing a comprehensive up-to-date understanding of typologies in complex sanctions evasion schemes relevant to PF and identifying enforcement challenges and best practices, which helps to inform countries' PF risk assessment and risk mitigation.
The questions posed by the FATF include: (i) which unique products or services are most vulnerable to exploitation by sanctions evaders and PF actors; (ii) how risks related to vulnerable products or services and/or high-risk countries for sanctions evasion and/or PF activity are managed; (iii) measures (such as setting suspicious transaction report rules) that effectively detect potential sanctions evasion activity; (iv) best practices for information sharing with the public and/or private sectors; and (v) what public information the FATF can provide to assist the private sector and others in mitigating PF risk.
The deadline for responses is 21 March.Topic : Financial Crime and Sanctions -
EC proposes omnibus sustainability package
26 February 2025
The European Commission (EC) has published two omnibus proposals on sustainability and EU investments, designed to address overlapping, unnecessary or disproportionate rules that are creating unnecessary burdens for EU businesses. The package includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Adjustment Mechanism (CBAM). In particular, the proposals seek to make sustainability reporting more accessible and efficient, simplify due diligence to support responsible business practices, strengthen the carbon border adjustment mechanism for a fairer trade and unlock opportunities in European investment programmes.
The package is also accompanied by a draft Taxonomy Delegated Act for public consultation. The EC published a Q&A and press release explaining in further detail the purpose of the omnibus legislation and the changes that are proposed.
Read more.Topic : Sustainable Finance -
EC call for evidence on amendments to Delegated Regulation under Taxonomy Regulation
26 February 2025
The European Commission (EC) has published a call for evidence on a draft Commission Delegated Regulation amending Commission Delegated Regulation 2021/2178 in relation to the simplification of the content and presentation of information to be disclosed concerning environmentally sustainable activities. The draft also proposes amendments to Commission Delegated Regulations 2021/2139 and 2023/2486 as regards simplification of certain technical screening criteria for determining whether economic activities cause no significant harm to environmental objectives. The proposals in the Draft Regulation include a 10% de minimis threshold and excluding from the denominator of the key performance indicators (KPIs) exposures of financial institutions to undertakings with an average number of over 1000 employees until the Commission's review of Delegated Regulation 2021/2178 is finalised. The application of the trading book and the fees and commission KPIs is also postponed until 2027. The EC also proposes to simplify templates such as summary KPIs and 'per activity' information to no longer duplicate elements that are covered by general reporting templates. The call for evidence closes on 26 March.
The EC has also published two omnibus proposals on sustainability and EU investments.Topic : Sustainable Finance -
FCA speech on approach to NBFI leverage
26 February 2025
The UK Financial Conduct Authority (FCA) has published a speech by Sarah Pritchard, executive director of consumers, competition and international, on the FCA's approach to non-bank financial intermediation (NBFI) leverage. The FCA believes that the first line of defence against the build-up of systemic risk related to leverage use is NBFIs themselves appropriately managing their own investment risk. However, for NBFIs to effectively manage their risks related to leverage use, they need to have access to adequate data and information about the markets in which they operate and the risks to which they're exposed. The second line of defence is counterparty credit risk management. However, in recent stress episodes, counterparty credit risk management has often failed to prevent systemic risks from crystallising. Enhancing private disclosure between counterparties would give leverage providers more information about the overall risk exposures of their NBFI clients, allowing them to manage their counterparty risk more effectively. That said, if NBFIs are required to disclose too much information, this could reveal proprietary information about their investment strategies. The FCA consider that industry has an important role to play in establishing best practice and in developing solutions that can balance the interests of leverage users and providers to improve data availability, so that NBFIs and counterparty credit providers can continue to operate as the first and second lines of defence.
Read more. -
EC consultation on commodity derivatives market
26 February 2025
The European Commission has published a targeted consultation document on a review of the functioning of commodity derivatives markets (including for these purposes emissions allowances) and certain aspects relating to spot energy markets. The outcome of this consultation will feed into the Markets in Financial Instruments Directive report with a view to making the EU commodity derivatives markets more efficient and resilient.
The consultation seeks stakeholders' feedback on a broad range of issues, including: (i) data aspects relating to commodity derivatives; (ii) the ancillary activity exemption; (iii) position management and position reporting; (iv) position limits; (v) circuit breakers; and (vi) other elements stemming from the Draghi report on EU competitiveness. Responses must be submitted by 9 April. -
UK FCA portfolio letter on supervision priorities for asset management and alternatives portfolios
26 February 2025
The UK Financial Conduct Authority (FCA) has published a portfolio letter explaining its current supervision priorities for asset management and alternatives. Firms must discuss this letter with their Board, Executive Committee and accountable Senior Managers to consider whether the risks of harm discussed exist in their firm and implement strategies for managing them.
The FCA's supervisory priorities include:- Supporting confident investing in private assets. The FCA will shortly be releasing its multi-firm review on private market valuation practices. The FCA will also start a multi-firm review on conflicts of interest at firms managing private assets.
- Market integrity and avoiding disruption. Informed by the vulnerabilities identified in the System Wide Explanatory Scenario, the FCA will focus surveillance on prudent risk management, liquidity management and operational resilience.
- Consumer outcomes. The FCA will publish its findings from the ongoing multi-firm review of unit linked funds later this year and will also start a multi-firm review of model portfolio services (MPS). This review of MPS will look at how firms are applying the Consumer Duty, to provide confidence that investors are receiving good outcomes from MPS.
Read more. -
UK Unauthorised Co-ownership Alternative Investment Funds (Reserved Investor Fund) Regulations 2025 published
26 February 2025
The Unauthorised Co-ownership Alternative Investment Funds (Reserved Investor Fund) Regulations 2025 have been published, along with an explanatory memorandum. The regulations support the Government's introduction of the reserved investor fund (RIF) which will be a new type of UK-based investment fund vehicle legally structured as an unauthorised co-ownership alternative investment fund. The regulations will apply, with modifications, sections 261M to 261O and 261P(1) and (2) of the Financial Services and Markets Act 2000, which currently apply to investors in investment funds that are authorised contractual schemes, to investors in UK-based RIFs (or funds that were RIFs). The Regulations were made on 25 February and come into force when the Co-ownership Contractual Schemes (Tax) Regulations 2025 which establish RIFs come into force, that is 19 March. -
ESMA guidelines on cryptoasset transfer services under MiCAR
26 February 2025
The European Securities and Markets Authority (ESMA) has published official translations of its guidelines on the procedures and policies, including the rights of clients, in the context of transfer services for cryptoassets under the Markets in Crypto-Assets Regulation (MiCAR) on investor protection. The guidelines apply to competent authorities and cryptoasset service providers (CASPs) that act as providers of transfer services for cryptoassets on behalf of clients within the meaning of Article 3(1)(26) of MiCAR. These guidelines aim to ensure the common, uniform and consistent application of the provisions in Article 82 of MiCAR. They include guidelines on: (i) the policies and procedures in the context of transfer services for cryptoassets; (ii) information requirements on individual transfers for cryptoassets; (iii) execution times and cut-off times; (iv) rejection or suspension of an instruction to transfer cryptoassets or return of cryptoassets transferred; and (v) the liability of the CASP.
The guidelines will apply from 27 April. National competent authorities must notify ESMA by 26 April whether they comply, do not comply but intend to comply or do not intend to comply with the guidelines. Cryptoasset service providers are not required to report whether they comply with the guidelines. -
ESMA guidelines on reverse solicitation under MiCAR
26 February 2025
The European Securities and Markets Authority (ESMA) has published official translations of its guidelines on situations in which a third-country firm is deemed to solicit clients established or situated in the EU and supervision practices to detect and prevent circumvention of the reverse solicitation exemption under the Markets in Crypto-Assets Regulation (MiCAR). The guidelines apply to competent authorities in relation to Article 61(3) of MiCAR. The guidelines include discussion of: (i) the means of solicitation; (ii) the fact that the solicitation may be carried out by the third-country firm itself or any person acting on its behalf or having close links with the third-country firm; and (iii) the construction of the concept of 'exclusive initiative of the client'. The Annex to the guidelines contains a non-exhaustive list of examples of circumstances where a third-country firm is likely to be regarded as soliciting clients in the EU.
The guidelines will apply from 27 April. National competent authorities must notify ESMA by 26 April whether they comply, do not comply but intend to comply or do not intend to comply with the guidelines. -
Revised FATF AML and CTF standards to better promote financial inclusion
25 February 2025
The Financial Action Task Force (FATF) has published an updated version of its anti-money laundering (AML) and counter-terrorist financing (CTF) standards after the February FATF Plenary approved changes to Recommendation 1 and its Interpretive Note, with corresponding amendments to Interpretive Notes to Recommendations 10 and 15, as well as related Glossary definitions to better support financial inclusion. The amendments aim to better promote financial inclusion through increased focus on proportionality and simplified measures under the risk-based approach. Alongside this, the FATF also published a consultation document on updating its Guidance on AML/CFT measures and financial inclusion, to equip policy makers and regulators with practical examples. Responses must be submitted by 4 April.Topic : Financial Crime and Sanctions -
EBA consultation on amending data collection for 2026 benchmarking under CRD IV
25 February 2025
The European Banking Authority (EBA) has published a consultation paper containing draft implementing technical standards (ITS) on amending Commission Implementing Regulation (EU) 2016/2070 with regard to the benchmarking of internal models in advance of the 2026 benchmarking exercise. Article 78 of Directive 2013/36 (CRD VI) requires competent authorities to conduct an annual assessment of the quality of approaches used for the calculation of own funds requirements. To assist competent authorities in this assessment, the EBA calculates and distributes benchmark values to competent authorities that allows a comparison of individual institutions' risk parameters. These benchmark values are based on data submitted by institutions as laid out in Commission Implementing Regulation (EU) 2016/2070 which specifies the benchmarking portfolios, templates and definitions to be used as part of the annual benchmarking exercises.
Read more.Topic : Prudential Regulation -
FATF second consultation on payment transparency
24 February 2025
The Financial Action Task Force (FATF) has published a second consultation on payment transparency, and in particular proposed revisions to recommendation 16 (R.16). The revisions adapt the FATF Standards to the changes in payment business models and messaging standards, as well as to the evolving risks and vulnerabilities. This consultation picks up the main issues raised in the first consultation during February to May 2024, and how these have now been addressed. It also provides more information on the questions of policy intent and proportionality which were raised as overarching issues during that consultation. The revised proposal is attached as an annex to the consultation.
The deadline for responses is 18 April. The FATF will finalise the revisions in June, following which it will develop a guidance paper on payment transparency to facilitate consistent implementation of the updated standards. -
UK FCA multi-firm review findings on suitability reviews
24 February 2025
The UK Financial Conduct Authority (FCA) has published a new webpage setting out their findings of whether financial advisers are delivering the ongoing advice services that consumers have paid for. The review focused on delivery of suitability reviews as firms generally included these as part of their ongoing advice service. The FCA found that in 83% of the cases where suitability reviews were promised, they were delivered. Firms reported that in a further 15% of cases, clients had either declined the review or not engaged with the firm's request for the information needed to conduct a review. There were fewer than 2% of cases where firms reported they had made no effort to deliver the suitability review to clients. However, the FCA notes that there were differences in the results across the firms surveyed and the population surveyed was not a representative sample. Additionally, a small subset of firms was not readily able to provide data for all of the years the FCA requested.
Read more.Topic : Consumer / Retail -
FSB letter to G20 finance ministers and central bank governors ahead of meeting
24 February 2025
The Financial Stability Board (FSB) has published a letter (dated 21 February) to the G20 finance ministers and central bank governors ahead of their meeting on 26 and 27 February. The letter addresses areas of focus for the FSB, including:- Implementation monitoring, providing a strategic review of the FSB's monitoring of 15 years of implementation of reforms. The review is intended to provide valuable insights into the effectiveness of the monitoring of post-global financial crisis regulatory reforms and identify areas where improvements can be made in the tools used to ensure consistent, global implementation of agreed reforms. The FSB will publish a progress report in October.
- Completing the G20 roadmap to enhance cross-border payments. The FSB note that as the work has advanced, many structural issues have become apparent that require concerted efforts to resolve. Addressing these issues calls for significant additional work up to and beyond 2027. The FSB will report in October on progress towards the G20's goal of making cross-border payments faster, cheaper, more transparent, and accessible. The FSB's focus this year is on improving the end-user experience, coordinating closely the work of the Bank for International Settlements Committee on Payments and Market Infrastructures and other partner organisations.
Read more. -
EBA report on data availability and feasibility of a common methodology for ESG exposures
24 February 2025
The European Banking Authority (EBA) has published a report on the data availability and feasibility of a common methodology for ESG exposures. In accordance with the mandate under Article 501c(1) of Regulation 575/2013 (CRR), this report aims to assess the availability and accessibility of data related to environmental, social and governance (ESG) risks, as well as the feasibility of introducing a standardised methodology for identifying and qualifying banking book credit exposures to ESG risks.
The EBA explores institutions' existing practices and identifies the current challenges in standardising the identification and classification of exposures to ESG risks, building on observations related to data quality and collection, assessment methodologies and available regulatory guidance. The overview of current practices is complemented by an analysis of specific elements covered by the mandate, including sustainability disclosure reporting frameworks, supervisory stress testing and ESG scores in the credit risk ratings of external credit assessment institutions.
Read more. -
ESMA guidelines on stress test scenarios under MMF Regulation
24 February 2025
The European Securities and Markets Authority (ESMA) has published official translations of its guidelines on stress test scenarios under the Money Market Funds Regulation (MMF Regulation). These guidelines apply to competent authorities, MMFs and managers of MMFs in relation to Article 28 of the MMF Regulation. In particular, and as specified in Article 28(7) of the MMF Regulation, they establish common reference parameters of the stress test scenarios to be included in the stress tests. The parts of the guidelines shown in red text will apply from 24 April. The other parts of the guidelines already apply from the dates specified in Articles 44 and 47 of the MMF Regulation.Topic : Fund Regulation -
UK FCA research note on AI's role in credit decisions
24 February 2025
The UK Financial Conduct Authority (FCA) has published a research note on AI's role in credit decisions, exploring the issue of AI explainability in the context of algorithm-assisted decision-making, using consumer credit decisions as a case study to test out different approaches. The researchers used an online experiment to study whether different kinds, or 'genres', of explanation lead to better consumer outcomes such as consumers' ability to judge whether algorithm-assisted decisions are erroneous. Specifically, the researchers tested whether participants were able to identify errors caused either by incorrect data used by the algorithm or by flaws in the algorithm's decision logic itself.
The experiment found that additional information may make it more difficult to spot errors because there is simply more information to review, encouraging participants to focus on whether this decision logic was followed rather than if the decision logic was sound. However, participants who were given more information about the inner workings of the algorithm's decision-making reported feeling more confident in their ability to judge the algorithm's decisions—but their actual judgement was worse on average. The findings reiterate the value of testing accompanying materials that may be provided to consumers when explaining AI, machine learning and/or algorithmic decision-making to understand how effective they are.
Read more.Topic : Artificial Intelligence -
Wolfsberg Group FAQs to help assess risks generated by the emergence of digital assets for AML and CTF purposes
21 February 2025
The Wolfsberg Group has published FAQs on defining digital assets. The FAQs propose definitions to be used by financial institutions, policymakers, supervisors and regulators to understand the characteristics of digital assets, money laundering, terrorist financing and operational risks they generate, as well as serve as an input to financial institutions developing policies and appropriate controls. The Wolfsberg Group intends to supplement these FAQs in future with guidance on the risks and associated controls for digital assets in line with the concepts developed in the FAQs.
The Wolfsberg Group has also published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards. -
Wolfsberg Group guidance supplementing payment transparency standards
21 February 2025
The Wolfsberg Group has published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards. The guidance discusses roles played by key actors in a payment chain and their respective responsibilities to adhere to payment transparency standards across a sample of commonly observed payment flows. It includes an example of cross-border payment between two countries, two parties and with no intermediaries, as well as an example of three different ways in which an intermediary agent payment service provider (PSP) can be involved in a payment to draw attention to what information is available to each actor from the payment message and what responsibilities they have in relation to payment transparency requirements. The guidance serves as a reference guide that can be used by all PSPs, regulators and standard setters.
The Wolfsberg Group has also published FAQs on defining digital assets. -
FSB thematic peer review on global regulatory framework for cryptoasset activities
21 February 2025
The Financial Stability Board (FSB) has published summary terms of reference for its thematic peer review on the FSB global regulatory framework for cryptoasset activities. The objective of this peer review is to examine members' progress, experience and lessons learned in implementing the FSB global regulatory framework for cryptoasset activities. This includes the high-level recommendations for the regulation, supervision and oversight of both cryptoasset markets and activities, and global stablecoin arrangements. It will focus particularly on the: (i) regulatory frameworks and implementation status; (ii) data reporting; (iii) cross-border cooperation; and (iv) stablecoins. The FSB expects to publish the peer review report in October.
The FSB is seeking feedback from stakeholders as part of its thematic peer review and a questionnaire has been distributed to relevant jurisdictions to collect information. The FSB invites feedback on issues such as: (a) the impact of jurisdictional regulatory frameworks on decisions of cryptoasset issuers and service providers; (b) experiences and challenges faced by cryptoasset market participants in meeting the relevant regulatory and supervisory requirements; (c) how financial stability vulnerabilities of cryptoasset activities differ across jurisdictions; and (d) whether there are specific market practices and/or trends in certain geographies and/or segments that may pose a threat to financial stability.
Feedback should be submitted by 28 March.Topic : FinTech -
EU MiCAR technical standards published
20 February 2025
Two delegated acts were published in the Official Journal of the European Union (OJ) in respect of the EU MiCAR.- Commission Delegated Regulation (EU) 2025/303, which comprises regulatory technical standards specifying the information to be included by certain financial entities in the notification of their intent to provide crypto-asset services.
- Commission Implementing Regulation (EU) 2025/304, which comprises implementing technical standards for the standard forms, templates and procedures for the notification by certain financial entities of their intention to provide crypto-asset services.
Both sets of technical standards concern the notification requirements applied to certain firms seeking to provide crypto-asset services, where article 60 of MiCAR imposes a requirement to supply specified information to the competent authority of the applicant's home member state at least 40 working days before providing those services. The Delegated and Implementing Regulations will enter into force on the twentieth day following their publication in the OJ.