The European Commission (EC) has launched a consultation on the Fundamental Review of the Trading Book (FRTB) under Basel III, focusing on market risk for banks. Although most Basel III requirements have applied since January, the EC postponed FRTB implementation on several occasions and most recently to 1 January 2027 due to delays and uncertainty regarding FRTB implementation in other major jurisdictions. To address potential negative impacts arising from an unlevel playing field in the international implementation of the FRTB, the consultation seeks feedback on whether the EC should adopt a delegated act, using its powers under Article 461a of the Capital Requirements Regulation by the end of March 2026. This empowerment, due to previous postponements, now only allows the introduction of targeted relief measures and targeted multipliers for up to three years.

Longer term solutions will be duly and timely considered in a comprehensive way. The proposed policy options comprises two main components: (i) the introduction of temporary targeted amendments to the market risk framework that would address aspects of the framework on which other jurisdictions have already deviated or indicated that they would plan to deviate in their final FRTB implementation; and (ii) the introduction of a multiplier for the overall market risk capital requirements that banks negatively impacted by the new rules (i.e., banks facing an increase in capital requirements for market risk) would be allowed to use to significantly limit their market risk capital requirements increases for three years. The EC highlights that due to the temporary nature of the multiplier and its objective, the methodology should be simple and risk‑sensitive, and relatively easy to implement, maintain and supervise. The deadline for responses is 6 January 2026.

The European Banking Authority (EBA) has published a follow-up peer review report examining the supervisory practices of EU competent authorities regarding their assessment of credit valuation adjustment (CVA) risk of the institutions under their supervision. The same four EU competent authorities which were part of the EBA's 2023 peer review were also part of this follow up review. The EBA found that competent authorities continue to largely assess CVA risk sufficiently, using approaches which are fit for purpose in satisfying the regulatory and supervisory review and evaluation process guidelines. Furthermore, since the 2023 report, all competent authorities have made progress to strengthen their CVA risk assessments and address the follow-up measures suggested as part of that report. However, only one competent authority was found to have made specific efforts to review compliance with the regulatory technical standards (RTS) in Commission Delegated Regulation (EU) 2018/728 on the procedures for excluding transactions with non-financial counterparties established in a third country from the own funds requirements for CVA risk (Exclusion RTS). The EBA urges continued efforts to ensure robust CVA risk management and compliance with the Exclusion RTS to ensure that this risk is properly managed and capitalised by the institutions under their supervision.

HM Treasury (HMT) has published a consultation on proposals to reform the UK's anti-money laundering and counter-terrorist financing (AML/CTF) supervisory regime for professional services firms. This follows the October consultation response and policy statement confirming that the UK Financial Conduct Authority (FCA) will be the sole AML supervisor for legal, accountancy and trust and company service providers under the Money Laundering Regulations 2017 (MLRs). The consultation sets out the FCA's proposed key duties, powers and accountability mechanisms that the FCA will need for supervising professional services firms under the MLRs, along with the legislative changes needed to implement these reforms. While many proposals involve extending existing MLR provisions to the FCA in its new expanded role, HMT is also considering whether further enhancements are necessary to the MLRs to ensure the FCA has a comprehensive supervisory toolkit.

Key proposals include the following as set out below.

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HM Treasury (HMT) has published a draft statutory instrument (SI), the Over the Counter Derivatives (Intragroup Transactions) Regulations 2026, for technical comment, alongside a policy paper. The proposed Regulations aim to replace the temporary intragroup exemption regime (TIGER), which expires on 31 December 2026, with a permanent framework for intragroup exemptions from clearing and margin requirements under the UK European Market Infrastructure Regulation (UK EMIR). The draft SI should be read alongside the UK Financial Conduct Authority's consultation paper, published on the same day, which sets out supporting proposals to simplify the exemption process.

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The UK Financial Conduct Authority (FCA) has published consultation paper CP25/30 on changes to its binding technical standards (BTS) on the intragroup exemption regime under the UK European Market Infrastructure Regulation (UK EMIR). The consultation should be read alongside HM Treasury's (HMT) draft statutory instrument (SI), published on the same day for technical comment, which sets out the proposed amendments to UK EMIR. This consultation summarises HMT's proposed legislative changes to the intragroup regime and sets out the FCA's proposals to implement these changes alongside additional changes to consolidate the regime and further reduce burdens on counterparties.

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The UK Financial Conduct Authority (FCA) has published a progress statement on its proposed motor finance consumer redress scheme consultation, following the UK Supreme Court ruling on 1 August. In the statement, the FCA confirms that the consultation deadline has been extended from 18 November to 12 December. The FCA also confirms that it has been actively engaging with stakeholders and has received feedback on key issues, including on the methodology for calculating redress, the time period for the scheme, the rate of compensatory interest, how independent mechanisms will ensure confidence, including the role of the Financial Ombudsman Service and ideas for alternative approaches, and fraud prevention. It urges respondents to provide detailed evidence and alternative suggestions where they disagree with proposals, all of which will be considered before final decisions are made.

Final rules are still expected in early 2026 but the FCA confirms this will now be February or March. While some complaints have been paused since January 2024 and the FCA has consulted on extending this pause beyond 4 December 2025, the consultation is now closed and the FCA is considering responses. However, the FCA stresses that complaints cannot remain paused indefinitely and lenders are therefore encouraged to maintain momentum to deliver certainty for customers and the wider market.

The Economic Secretary to HM Treasury (HMT) has published a letter confirming it has commissioned the Financial Services Skills Commission to produce a comprehensive report on the impact of AI and other disruptive technologies on the UK financial services sector. The research, aligned with the Financial Services Growth and Competitiveness Strategy, will examine emerging technologies, their effect on the sector's growth at both national and regional levels and on implications for customers. It will also identify the skills required for successful adoption and deployment of the technologies and set out a clear plan with actionable steps for employers, employees, education providers and government on how to build the skills required over the next decade. The final report is scheduled for mid-2027.

The European Banking Authority (EBA) has published a final report on guidelines for environmental scenario analysis under the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). These guidelines complement the EBA's January 2025 environmental, social and governance (ESG) risk management framework by clarifying supervisory expectations for how institutions should conduct environmental scenario analysis, including for institutions using the internal ratings-based approach for calculating the own funds requirements for credit risk. The EBA consulted on the guidelines in January. In response to feedback, the EBA has amended the guidelines with a focus on enhancing clarity and simplifying expectations in line with operational realities. The scope has been streamlined to focus on environmental risks, with climate as the priority. 

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HM Treasury (HMT) has released its financial inclusion strategy, outlining a comprehensive national plan to remove barriers to financial participation and to build financial resilience. The strategy focuses on six main areas: (i) improving digital inclusion and access to banking through the roll-out of 350 in-person banking hubs and the launch of a pilot scheme enabling the opening of a bank account without standard ID; (ii) supporting savings by delivering regulatory clarity to enable employers to offer workplace savings schemes with confidence and driving uptake of the government's Help to Save scheme; (iii) ensuring the insurance market is supporting the financial wellbeing of households and vulnerable customers; (iv) increasing access to affordable credit; (v) strengthening debt advice provision; and (vi) introducing compulsory financial education in primary schools. HMT will review the strategy's implementation progress two years after publication and provide an update thereafter.

The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) (No. 2) Order 2025 has been laid before Parliament, accompanied by an explanatory memorandum. A draft was laid before Parliament in June. The Order amends the Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 (the 2025 Order) which provides for certain buy-now-pay-later (BNPL) agreements to become "regulated deferred payment credit agreements" with effect from 15 July 2026. Under article 3(2) of the 2025 Order, nearly all merchants brokering BNPL products are exempt from the regulatory requirements concerning credit broking by virtue of a new provision (article 36FB) in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO). Generally, merchants who introduce customers to regulated credit products are undertaking the regulated activity of credit broking under article 36A of the RAO and must have regulatory approval, unless an exemption applies.

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The European Systemic Risk Board (ESRB) has published a report analysing the credit default swaps (CDS) market, with a particular focus on single-name CDSs in terms of their market structure and current regulatory framework. The report evaluates the EU regulatory framework for CDSs and the functioning of the CDS market in light of recent derivatives market instability, notably the March 2023 banking turmoil. The ESRB identifies key vulnerabilities and calls for improved data quality, enhanced transparency, and greater cross-border regulatory co-ordination. To address these issues, it sets out a medium-term policy roadmap aimed at improving the functioning of the single-name CDS market and addressing systemic risks.

Key proposals include:

• Enhancing post-trade market transparency for single-name CDSs.
• Strengthening supervisory access to information through improved quality and standardisation of data reported as well as through enhanced global co-operation.
• Promoting the efficiency and functioning of the single-name CDS market.
• Improving credit risk assessment frameworks by reducing excessive reliance on CDS spreads and raising awareness of the price formation mechanisms.

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The Joint Committee of the European Supervisory Authorities (ESAs) has published an updated version of its consolidated Q&A document on the Sustainable Finance Disclosure Regulation (SFDR) and the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288). A new Q&A has been added clarifying the requirements under Article 6(2) of the SFDR Delegated Regulation concerning principal adverse impact (PAI) disclosures.

The European Banking Authority (EBA) has launched a consultation on draft guidelines on the authorisation of third-country branches (TCBs) under Article 48c(8) of the Capital Requirements Directive (CRD), as amended by CRD VI (Directive (EU) 2024/1619). The guidelines set out: (i) the list of information to be included in the application, concerning matters such as the business plan, capital endowment, liquidity, internal governance, booking arrangement and reporting requirements and information about head undertaking(s), in particular their compliance with prudential requirements and a reasoned, third party legal opinion on the absence of impediments in the third country's framework precluding the ability of the TCB to comply with the EU and prudential legislation and regulation; (ii) the procedure for authorisation, as well as standard forms and templates for the provision of the information required; (iii) the conditions for granting authorisation; and (iv) the conditions under which competent authorities may rely on information that has already been provided in the process of any prior authorisation third country branch authorisation.

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The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published three draft reports proposing amendments to the European Commission's legislative package on the establishment of the digital euro. These proposals collectively aim to establish a comprehensive legal framework for the issuance, use and coexistence of the digital euro alongside physical cash. The first draft report (COM(2023)0369) proposes amendments to the proposed regulation establishing the digital euro as a central bank digital currency, detailing its governance and operational principles. Accompanying this, the second draft report (COM(2023)0368) proposes limited procedural amendments to the proposed regulation on the provision of digital euro services by payment service providers in Member States whose currency is not the euro. Finally, the third draft report (COM(2023)0364) proposes amendments to the proposed regulation on the legal tender status of euro banknotes and coins. This measure is designed to safeguard the mandatory acceptance of continued use of cash, ensuring it remains a viable payment option alongside the digital euro.

Five technical standards supplementing the Markets in Financial Instruments Regulation enabling the creation of the consolidated tape have been published in the Official Journal of the European Union (OJ):

• Commission Delegated Regulation (EU) 2025/1143 regarding regulatory technical standards (RTS) on the authorisation and organisational requirements for approved publication arrangements (APAs) and approved reporting mechanisms (ARMs), and on the authorisation requirements for consolidated tape providers, and repealing Commission Delegated Regulation (EU) 2017/571.
• Commission Delegated Regulation (EU) 2025/1155 regarding RTS specifying the input and output data of consolidated tapes, the synchronisation of business clocks and the revenue redistribution by the consolidated tape provider for shares and exchange traded funds, and repealing Commission Delegated Regulation (EU) 2017/574 from 2 March 2026. Articles 11 to 16 will apply from 2 March 2026.

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The UK government has launched a new collections webpage consolidating resources on sanctions enforcement. The page lists published monetary penalties, prosecution outcomes and disclosure notices imposed by HM Revenue & Customs, the National Crime Agency, the Office of Financial Sanctions Implementation and the Office of Trade Sanctions Implementation. It also lists case studies, blogposts and annual reviews containing key lessons from enforcement actions in the relevant year.

The International Organization of Securities Commissions (IOSCO) has published a final report on environmental, social and governance (ESG) indices used as benchmarks (FR/15/25), referred to as "ESG benchmarks". ESG benchmarks are defined in the report as indices specifically constructed to reflect ESG factors according to its publicly disclosed methodology, and which are used as a reference for assessing ESG risk exposure or ESG impact. The report provides a comparative analysis of ESG benchmarks against IOSCO's Principles for Financial Benchmarks (PFBs). The report compares key characteristics and vulnerabilities of ESG benchmarks against traditional financial benchmarks. It also focuses on greenwashing vulnerabilities and existing market and regulatory initiatives aimed at addressing these vulnerabilities.

The report's assessment is structured around the four core pillars of benchmarks, examining how the relevant PFBs apply and whether ESG benchmark administrators should consider any additional factors when embedding these pillars into benchmark design and administration to maintain transparency, consistency, and reliability.

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The International Organization of Securities Commissions (IOSCO) has published a final report providing guidance on pre-hedging (FR/14/25). Pre-hedging is a practice used by dealers to manage the risk of anticipated primary principal market offerings and secondary market transactions, mainly in wholesale markets. While pre-hedging can offer benefits such as enabling price discovery, reducing market risk and market impact, assisting liquidity, and improving competition, IOSCO notes that certain practices pose potential risks including in relation to misuse of information, inability to understand risks, lack of transparency and adverse impact on price and liquidity. The report defines pre-hedging and reviews existing regulatory approaches and industry standards. It identifies potential issues and gaps in current industry practices and regulation and aims to promote consistent interpretation across jurisdictions. IOSCO also sets out recommendations to guide regulators in determining acceptable pre-hedging practices and managing the associated conduct risks effectively. Additionally, a dedicated chapter summarises feedback from its earlier consultation on pre-hedging.

The Financial Services (Overseas Recognition Regime Designations) Regulations 2025 (the ORR Regulations) have been laid before Parliament, accompanied by an explanatory memorandum. A draft was laid before Parliament in July. The ORR is the UK's regime for providing "recognition" of a regulatory regime in an overseas jurisdiction, allowing cross-border financial services into the UK. It is similar to the EU's equivalence and the U.S.'s comparability regimes. The ORR Regulations, made on 30 October, set out powers and obligations relating to HM Treasury's ORRs, including (i) giving HM Treasury the power to request information and advice from the Bank of England (BoE), the UK Prudential Regulation Authority and the UK Financial Conduct Authority in connection with the ORR; (ii) giving HM Treasury the power to impose conditions on the application of an ORR designation; and (iii) requiring HM Treasury and the UK regulators to co-ordinate the discharge of their respective functions in relation to ORRs. The instrument also amends ORRs that have already been established.

These amendments are intended to ensure there is clarity and uniformity across ORRs, to make the law clearer, and to provide for efficient and effective regulatory arrangements relating to the provision of financial services or the operation of financial markets. The Regulations will enter into force on 28 November.

The UK Financial Conduct Authority (FCA) has published Handbook Notice 134, outlining amendments to the FCA Handbook resulting from the following statutory instruments:

• (i) Markets in Financial Instruments (Transfer of MiFID Organisational Regulation) Instrument 2025; (ii) Technical Standards (Markets in Financial Instruments Regulation) (Organisational Requirements) Instrument 2025; and (iii) Commodity Derivatives (Position Limits, Position Management and Perimeter) (No 2) Instrument 2025. These instruments mainly entered into force on 23 October, with other parts coming into force on 12 January 2026 and 19 January 2026. The instruments make changes relating to the MiFID Organisational Regulation. The FCA is keeping the substance of the MiFID Organisational Regulation requirements the same without any policy or scope changes. Most of the changes that have been made are to reflect its Handbook drafting style and to clarify drafting where possible.

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Commission Implementing Regulation (EU) 2025/2159 (the Regulation) has been published in the Official Journal of the European Union (OJ). The Regulation amends the implementing technical standards (ITS) laid down in Implementing Regulation (EU) 2021/2284 as regards supervisory reporting and disclosures of investment firms under the Investment Firms Regulation (IFR). Due to the changes introduced by the CRR III, the reporting framework for investment firms has been revised. Consequential changes to Implementing Regulation (EU) 2021/2284 are therefore needed. To provide investment firms with sufficient time to adapt their own internal system and to comply with the revised reporting requirements, a derogation has been laid down deferring the remittance date of the first quarterly reporting obligation after the date of application of this Regulation. The Regulation enters into force on the 20th day following publication in the OJ.

The UK Financial Conduct Authority (FCA) has published its findings from a multi-firm review into consolidation trends within the financial advice and wealth management sector. The FCA has seen an increase in consolidation in the financial advice and wealth management sector through acquisitions in recent years. Therefore, to support sustainable growth in the sector, the FCA has reviewed a sample of groups which included acquiring independent financial advisers (IFAs) and established wealth management businesses, providing discretionary investment management and advice solutions to group clients. The review assesses how firms manage risks, debt, governance and integration during and after acquisitions, highlighting both good practices and areas of increased risk. The FCA has seen consolidation support efficiency and growth by pooling resources, expertise and infrastructure and enabling long-term innovation, stronger governance and enhanced financial resilience. However, it has also seen that if fast growth of these businesses is not managed effectively, it may create poor outcomes. These could include poor client service, failure of business continuity and disorderly failure.

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The House of Lords Financial Services Regulation Committee (the Committee) has issued a formal response to HM Treasury's (HMT) reply to its report "Growing Pains: Clarity and Culture Change Required" which evaluated the progress made by the UK Financial Conduct Authority (FCA) and UK Prudential Regulation Authority (PRA) in supporting growth and competitiveness in the financial services sector and the wider UK economy. The Financial Services and Markets Act 2023 introduced a secondary objective for the UK regulators focused on international competitiveness and growth. While welcoming initial steps taken by the UK government, the Committee notes that HMT did not engage with several key findings, critical to the success of the secondary objective and broader UK economic growth. The Committee uses this opportunity to restate some of its recommendations and raise further questions on the following themes as set out below.

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The Bank of England and the UK Financial Conduct Authority (FCA) have published additional finalised Q&As on derivative reporting requirements under the UK European Market Infrastructure Regulation (UK EMIR) following a consultation on the draft Q&As in August. The additional Q&As include: (i) Q&A 4.14, which provides guidance on when it is acceptable to report with a technical International Securities Identification Number (ISIN). Following feedback to the consultation, an additional scenario has been included alongside those originally specified, and a technical ISIN has been created for use in the specified scenarios; and (ii) Q&A 11.7, which provides detailed guidance on the reporting of FX swaps. Further clarification has been added to this Q&A, including the addition of a table illustrating reporting expectations for FX swaps. The FCA has appended the finalised Q&As to the relevant sections of its UK EMIR reporting Q&As.

The Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025 have been published, accompanied by an explanatory memorandum. The Regulations will make changes to UK legislation to implement the UK's commitments under the Berne Financial Services Agreement (BFSA), signed with Switzerland in December 2023. The BFSA is an outcomes-based mutual recognition agreement covering a range of wholesale financial services, including asset management, banking, investment services, insurance and financial market infrastructure, as well as the provision of investment services to sophisticated high net worth clients. The BFSA allows UK insurance companies to offer certain wholesale insurance services in Switzerland without needing Swiss authorisation, while Swiss firms can offer certain investment services to sophisticated clients in the UK without requiring UK authorisation.

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Commission Implementing Decision (EU) 2025/2197 has been published in the Official Journal of the European Union (OJ), confirming the equivalence of New Zealand's legal and supervisory framework for financial benchmarks in accordance with Regulation (EU) 2016/1011 (the Benchmarks Regulation). Since 2018, non-EU benchmark administrators have benefited from a transitional period allowing continued use of third-country benchmarks within the EU, which was most recently extended in October 2023 by Commission Implementing Decision (EU) 2023/2222 until 31 December. The new equivalence Decision will mean that benchmarks administered by licensed entities in New Zealand, such as the New Zealand Bill Benchmark Rate, can continue to be used within the EU following the expiry of the transitional period on 31 December.

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The European Central Bank Governing Council has announced its decision to move on to the next phase of the digital euro project in a letter to Aurore Lalucq, Chair of the European Parliament's ECON Committee. The announcement follows the successful completion of the two-year preparation phase launched in 2023, which laid the groundwork for issuing a digital euro. The digital euro is intended to complement cash by offering a secure, inclusive and resilient public digital payment solution across the euro area. The ECB states the final decision on whether to issue a digital euro, and when, will only be made once the relevant legislation has been adopted, which is expected by 2026. A pilot exercise and initial transactions could begin as early as mid-2027, with the ECB aiming to be technically prepared for a potential first issuance by 2029. Published alongside the announcement were: (i) a report on digital euro user research; (ii) a technical report focusing on the workstream led by the dedicated Euro Retail Payments Board; and (iii) an update from the Rulebook Development Group on the digital euro scheme.

The Bank of England (BoE) has published its first annual report on the wholesale cash distribution market oversight regime, following its full operationalisation on 12 June under Part 5A of the Banking Act 2009, as introduced by the Financial Services and Markets Act 2023. The report outlines the BoE's supervisory approach in promoting the effectiveness, resilience and sustainability of the UK's wholesale cash distribution (WCD) industry. It also highlights several market-wide risks to the WCD market, which are set out below.

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The European Banking Authority (EBA) has issued a report with its formal response to the European Commission's (EC) March 2024 call for advice on six regulatory mandates under the forthcoming EU anti-money laundering and countering the financing of terrorism (AML/CFT) framework. The formal response aims to support the operational launch of the new Anti-Money Laundering Authority (AMLA) and includes the EBA's proposals for the draft regulatory technical standards (RTS) which the AMLA will ultimately adopt. These RTS separately cover: (i) methodologies for assessing inherent and residual money laundering/terrorist financing risks of obliged entities; (ii) risk assessment criteria for AMLA's selection of institutions for direct supervision; (iii) customer due diligence requirements; and (iv) classification of the severity of breaches and determination of pecuniary sanctions.

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The UK Financial Conduct Authority (FCA) has issued a warning to investors regarding contracts for difference (CFDs), a type of derivative that allows speculation on the price movement of shares or assets without owning the underlying asset. The FCA expresses concern that some firms are using high-pressure tactics to encourage investors to self-certify as professional clients, which thereby removes key retail consumer protections, potentially exposing individuals to losses beyond their financial capacity.

The regulator also raises concerns about the role of social media influencers in promoting offshore firms and unrealistic returns, often without disclosing that such firms are unregulated. The FCA reminds firms that they must not push elective professional or redirection promotions onto their retail clients, otherwise it will take action against firms who breach its rules. The FCA also reiterates its commitment to targeting "finfluencers" who unlawfully promote financial products and services. Firms are also reminded of their obligations under the consumer duty and investors are encouraged to use the FCA's InvestSmart tools to support informed decision-making with their investments.

The European Banking Authority (EBA) has published its final report on the draft regulatory technical standards (RTS) under Article 382(6) of the Capital Requirements Regulation (CRR), as amended by CRR3. The RTS establish a quantitative framework for assessing the materiality of credit valuation adjustment (CVA) risk exposures arising from fair-valued securities financing transactions (SFTs). Following feedback to the July 2024 consultation, the EBA retained its proposed quantitative approach to assessing materiality, opting for a ratio-based threshold of 5% to determine whether such transactions should be included in CVA capital requirements. The final RTS also uphold quarterly assessments aligned with COREP reporting cycles and clarify that the CVA capital requirement metric, rather than broader own funds or exposure values, should be used for the materiality test.

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The European Commission (EC) has adopted a communication providing guidance clarifying how banks can benefit from preferential prudential treatment under Article 133(5) of the Capital Requirements Regulation (CRR) when investing in equity through legislative programmes, which are structured public investment schemes established under EU or national law. These programmes, which combine public support (e.g. guarantees or co-investment) with private funding and oversight mechanisms, target strategic sectors such as clean technologies, digital innovation and defence. The guidance promotes consistent application across the Single Market, enabling banks to apply lower capital charges to qualifying exposures, reflecting their reduced risk profile. This initiative supports financial stability while enhancing access to equity financing for EU companies and advancing the EC's broader goals under the Savings and Investments Union (SIU), including capital market integration and competitiveness. A public register of eligible legislative programmes has been published, as well as a website with questions and answers on legislative programmes under Article 133(5).

The European Commission has adopted a Delegated Regulation amending Delegated Regulation (EU) 2022/805 to update the supervisory fee framework for benchmark administrators under the oversight of the European Securities and Markets Authority (ESMA). This amendment follows the expansion of ESMA's supervisory remit under the revised Benchmarks Regulation (BMR), which now includes EU benchmark administrators endorsing third-country benchmarks. Following the draft published in July, the Regulation introduces application and annual supervisory fees for this new category, aligning them with those applicable to recognised third-country administrators.

Notably, fees are differentiated based on whether benchmarks are deemed significant under Article 24 of the BMR, with fixed fees for non-significant benchmarks and turnover-based fees for significant ones. The Regulation also clarifies the calculation of applicable turnover and introduces transitional provisions for administrators recognised or supervised as of 1 January 2026. Specifically, administrators who are already under ESMA's supervision or have obtained recognition before this date will be subject to the new fee framework starting from the 2026 fee cycle. The changes aim to ensure proportionality ahead of the 31 December transitional deadline for third-country benchmark use in the EU. The Regulation will enter into force on the day following its publication in the Official Journal of the European Union.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/29, alongside a press release, setting out proposed rules and guidance for the UK short selling regime. This follows the introduction of the Short Selling Regulations 2025 (SSR 2025) under the Financial Services and Markets Act 2023. The FCA proposes to establish a new Short Selling Sourcebook within its Handbook, aiming to consolidate existing requirements and introduce targeted changes to reduce regulatory burdens and improve market efficiency. This approach is informed by HM Treasury's 2023 response to its call for evidence.

Key proposals include:

• Extending the Net Short Position (NSP) notification deadline to 23:59 on the day after the trade (T+1) and providing guidance on calculating NSPs and determining issued share capital.
• Clarifying when NSPs must be calculated and how to report within corporate groups.
• Requiring short sellers to retain records of covering arrangements for a minimum of five years.

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HM Revenue & Customs (HMRC) has released a comprehensive handbook to add to its resources, aimed at identifying and tackling trade-based money laundering (TBML). The guide provides an accessible overview of TBML techniques, legal frameworks and investigative strategies, with a particular focus on Operation A, an HMRC-led investigation that successfully disrupted a major organised crime group. The handbook includes case studies, evidentiary approaches using customs and trade data, prosecution insights and lessons learned. While tailored to UK systems and authorities, the resource offers valuable guidance for professionals globally who are exposed to TBML risks.

The European Commission has adopted a Delegated Regulation supplementing the European Market Infrastructure Regulation (EMIR), setting out regulatory technical standards (RTS) for the new active account requirement introduced by EMIR 3. The RTS follow the European Securities and Markets Authority 2024 consultation and specify the operational conditions, representativeness obligations and reporting requirements for the active account mandate.

The RTS specify minimum operational conditions, including legal and technical arrangements to support clearing services and internal systems to handle increased clearing volumes. Firms must also conduct annual stress tests to demonstrate IT connectivity and operational readiness. Reporting is required every six months, with the first report due six months after the Regulation enters into force. The aim is to reduce systemic risk and strengthen the resilience of EU clearing infrastructure. The Regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.

The UK Prudential Regulation Authority (PRA) has published near-final policy statement PS18/25, confirming its intention to retire the refined methodology to Pillar 2A capital requirements. This decision follows the 2024 consultation and is aligned with the forthcoming implementation of the Basel 3.1 standardised approach to credit risk (CR SA), now scheduled for implementation on 1 January 2027. The PRA concludes that the refined methodology to Pillar 2A, originally introduced to address conservatism in CR SA relative to the Internal Ratings-Based (IRB) approach, is no longer necessary due to improvements in risk sensitivity under Basel 3.1.

Despite mixed feedback from respondents, the PRA maintains that the retirement will simplify the capital framework, reduce operational burdens and better reflect firms' risk profiles. Implementation will take effect from 1 January 2027, aligning with the extended implementation date of Basel 3.1. Final policy materials are expected in Q1 2026, following HM Treasury's revocation of relevant Capital Requirements Regulation (CRR) provisions. Final minor amendments to policies concerning interest rate risk in the banking book (IRRBB) and pension obligation risk have also been published, with implementation deferred to 1 July 2026. The appendices to this near-final policy statement contain the PRA's near-final policy materials regarding the retirement of the refined methodology, as well as final policy materials related to IRRBB and pension obligation risk.

The UK Prudential Regulation Authority (PRA) has published near-final policy statement PS19/25, setting out its approach to restating remaining provisions of the Capital Requirements Regulation (CRR) into the PRA Rulebook and associated policy materials. This follows the 2024 consultation and complements earlier finalised proposals in the PRA's July policy statement.

The statement is structured into four chapters:

• Chapter 1 – provides an overview, summarises feedback to the consultation and outlines the scope of the near-final rules.
• Chapter 2 – covers amendments to the securitisation requirements, including updates to supervisory statements SS9/13 and SS10/18 and introduces new statements of policy (SoP7/25 and SoP8/25).
• Chapter 3 – covers other CRR provisions including the Groups Part, Credit Risk: Internal Ratings Based Approach Part, Counterparty Credit Risk Part and introduces a new Settlement Risk (CRR) Part of the Rulebook. It also updates supervisory statements SS15/13 and SS4/24 and introduces SoP6/25 on Internal Model Method permissions.
• Chapter 4 – focuses on changes related to the mapping of external credit rating agency ratings to credit quality mapping aligned with Basel 3.1 standards.

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The UK Prudential Regulation Authority (PRA) has published near-final policy statement PS20/25, marking the second and final phase of its "strong and simple" framework. This introduces a simplified capital regime for smaller, domestically focused banks and building societies, referred to as small domestic deposit takers (SDDTs). The framework aims to reduce regulatory complexity and compliance costs for these firms while maintaining their financial resilience. Phase 1, which focused on liquidity and disclosure simplifications, was finalised in the December 2023 policy statement. Phase 2, as outlined in this near-final policy statement, builds on phase 1 and incorporates feedback from the 2024 consultation.

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The Basel Committee on Banking Supervision (BCBS) has published a final technical amendment to the Basel framework, clarifying the treatment of guarantees and credit derivatives used to hedge counterparty credit risk (CCR) from derivative exposures. The technical amendment, revised following consultation feedback, applies specifically to a bank's use of fixed or capped protection and excludes securities financing transactions (SFTs) and securitisation exposures. Amendments have been made to the credit risk and CCR standards to align the treatment of guarantees and credit derivative protection with that of eligible collateral under the CCR framework.

These changes aim to clarify how fixed or capped protection should be reflected in exposure calculations and address inconsistencies in the application of the framework. As a technical amendment, it does not constitute a substantial change to the standards but resolves ambiguities that could not be addressed under the existing rules. Supervisors and the BCBS will monitor implementation and potential circumvention strategies, with the possibility of extending similar treatment to SFTs and securitisations if necessary. BCBS members have agreed to implement the amendment as soon as practical and within three years at the latest.

The European Commission has adopted a Delegated Regulation amending the regulatory technical standards (RTS) under Delegated Regulations (EU) 2018/1645 and 2018/1646, pursuant to the Benchmark Regulation (EU) 2016/1011. These amendments update the form and content of applications for recognition, authorisation and registration of benchmark administrators, reflecting changes introduced by the BMR recognition regime under Regulation (EU) 2019/2175 as well as further reforms under Regulation (EU) 2025/914 aimed at reducing the regulatory burden on administrators of smaller benchmarks. The amendments to both RTS are consolidated in a single amending Delegated Regulation.

Key revisions include enhanced disclosure requirements relating to organisational structure, employees and governance integrity, including self-declarations for management and oversight personnel. Additional provisions address operational separation of the applicant's business, record-keeping and complaint handling mechanisms. Applications must now be submitted electronically and either in the official language of the Member State where the legal representative is established or in a language customary in the sphere of international finance. Personal data retention by national competent authorities and the European Securities and Markets Authority is limited to five years after the individual has ceased to perform its function. The Regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.

The UK Financial Conduct Authority (FCA) has published a statement outlining guidance for firms intending to offer crypto exchange-traded notes (cETNs) to retail investors, following the lifting of its ban effective from 8 October. The products are classified as Restricted Mass Market Investments and only cETNs listed on the FCA's official list and traded on a UK Recognised Investment Exchange are eligible for retail distribution. Firms are expected to hold the appropriate permissions and comply with the relevant financial promotion rules. This includes not offering investment incentives, conducting mandatory appropriateness assessments, categorising clients, providing cooling-off periods and issuing prominent risk warnings. Firms are also expected to meet consumer duty obligations, ensuring products offer fair value, transparency and good consumer outcomes. Firms seeking authorisation or new permissions may request a pre-application meeting with the FCA through its pre-application support service.

HM Treasury has published a consultation paper and call for evidence inviting views on a range of proposals aimed at enhancing the UK's Bank Referral Scheme (BRS) to improve its performance. The BRS requires lenders (designated banks) to refer small-and medium-sized enterprise (SME) customers that they reject for finance, with the SME's permission, to finance platforms that can match the SME with alternative finance providers, to improve access to finance. The BRS operates under the Small and Medium Sized Business (Finance Platforms) Regulations 2015, which were made under powers in the Small Business, Enterprise and Employment Act 2015.

Key proposals include:

• Expanding the scope to allow non-bank lenders (e.g. building societies) to be designated under the BRS.
• Introducing a voluntary opt-in mechanism for smaller lenders to participate in the BRS.
• Improving transparency and timing of information provided to SMEs during the application process, including minimum standards for how and when they are informed about the BRS.

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The draft Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025 has been laid before UK Parliament and published alongside a draft explanatory memorandum. The draft Order seeks to bring the provision of environmental, social or governance (ESG) ratings within scope of regulation under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), making it a specified activity where such ratings are likely to influence decisions to invest in instruments listed in Part 3 of the RAO. This will require providers of an ESG rating to be authorised and supervised by the UK Financial Conduct Authority (FCA). Savings and transitional arrangements will apply, allowing firms to continue providing ESG ratings without authorisation, provided they submit an application for authorisation within a relevant application period to be specified by the FCA.

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The European Securities and Markets Authority (ESMA) has announced that cyber risk and digital resilience will remain central to its Union Strategic Supervisory Priorities (USSPs) for 2026. This follows strong engagement from national competent authorities (NCAs) and aligns with the implementation of the Digital Operational Resilience Act (DORA), enhancing ICT risk management and supervisory coordination across EU financial markets. ESMA urges NCAs to sustain supervisory momentum into 2026, as coordination between authorities' supervisory work and the DORA oversight framework will be essential. Additionally, NCAs will target supervisory efforts to consolidate achievement under the environmental, social and governance disclosures USSP, with a focus on high-risk areas. ESMA will also consider the potential introduction of new supervisory topics to address emerging risks at the Union-wide level in the following years.

HM Treasury has announced the launch of a new Scale-up Unit in Leeds, designed to accelerate the growth of innovative financial services firms. Jointly led by the UK Financial Conduct Authority (FCA) and the UK Prudential Regulation Authority (PRA), the Unit will provide bespoke regulatory support to fast-growing firms across three distinct groups including banks and building societies, insurers and FCA solo-regulated firms. Support for fintech firms is expected to follow in early 2026.

The Unit aims to simplify regulatory navigation, remove barriers to investment and offer firms a clear point of contact for timely responses to regulatory queries and access to expert guidance. It is intended to complement, not replace, existing supervisory and support services. The FCA published a press release and new webpage outlining how the Unit will operate, who it is for and how it differs from existing support services. The PRA also published a new webpage describing the Unit's purpose and sector-specific support, including tailored pages for insurers and banks and building societies. This joint initiative forms part of the government's broader Financial Services Growth and Competitiveness Strategy.

The European Banking Authority (EBA) has launched a consultation on its revised guidelines for the supervisory review and evaluation process (SREP) and supervisory stress testing, mandated under the Capital Requirements Directive (CRD). The proposed guidelines consolidate all relevant SREP provisions into a single, comprehensive framework as part of the EBA's efforts to simplify and enhance the EU supervisory framework. The update integrates new elements, including environmental, social and governance factors, operational resilience and mandates under the revised Capital Requirements Directive (CRD VI) relating to third-country branches and the output floor.

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The European Banking Authority has published two Q&A under the Capital Requirements Regulation (CRR): (i) 2025_7363 addresses how exposures to institutions should be treated under the Credit Risk Standardised approach, if such institutions have been waived of individual capital requirements under Article 7 of the CRR; and (ii) 2025_7470 addresses the eligibility as collateral under Article 207(2) of the CRR of secured notes designed specifically to remove any material positive correlation between the value of the note and the credit quality of its issuer.

The Bank of England (BoE) has published an update on the ongoing design phase of the digital pound, a proposed form of central bank digital currency intended to complement existing payment methods. While no decision has yet been made on its introduction, the focus over the past year has been on developing a detailed blueprint, supported by design notes and practical experimentation through the Digital Pound Lab. The blueprint is expected to be published in 2026.

This work aims to deepen understanding of how public money could operate within a multi-money system and will inform a joint, evidence-based assessment by the BoE and HM Treasury in 2026. In parallel, payment trends in the UK and internationally will continue to be monitored to support this assessment. If a decision is made to proceed, a digital pound would only be introduced following the passage of primary legislation by the UK Parliament. The BoE will continue targeted experiments and stakeholder engagement to explore what is viable and what may need to change.

The UK Financial Conduct Authority (FCA) has published a letter addressed to asset management and alternative firms outlining its expectations ahead of the UK's transition from T+2 to a T+1 securities settlement cycle, effective from 11 October 2027. The FCA has identified that some small and medium-sized asset managers and alternative investment firms may not yet be fully aware of the operational changes required. As such, the FCA reiterates its expectations and urges all impacted firms to proactively assess their readiness. With two years remaining, firms are expected to plan now to ensure their settlement processes, particularly those reliant on manual workflows, are sufficiently automated to meet the demands of a shortened settlement cycle.

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