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.
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EC adopts delegated regulation amending RTS for market risk under CRR
8 May 2025
The European Commission has adopted Delegated Regulation (EU) 2025/878 amending regulatory technical standards (RTS) on technical details of back-testing and profit and loss attribution requirements, the criteria for assessing the modellability of risk factors, and the treatment of foreign-exchange risk and commodity risk in the non-trading book. The amendments are being made to reflect amendments made to Regulation (EU) No 575/2013 (CRR) which introduced a number of remaining BCBS requirements which are yet to be implemented and some clarifications, including changes to ensure alignment with BCBS international standards. Key amendments include: (i) updated criteria for classifying trading desks and the removal of the aggregation formula for back-testing and profit and loss attribution requirements; (ii) adjusting documentation requirements to support competent authorities on whether institutions can use market data provided by third-party vendors in the assessment of modellability of risk factors; and (iii) clarifying the calculation of own funds requirements for market risk related to non-trading book positions. The regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Union.Topic : Prudential Regulation -
FCA findings from smaller asset managers and alternatives business model review
8 May 2025
The UK Financial Conduct Authority (FCA) has published findings of its review of smaller asset managers and alternatives business models, together with a press release. The review formed part of the FCA's alternatives supervisory strategy as outlined previously in 2022 in a portfolio letter. The FCA publication includes examples of good practice, to help new market entrants, smaller firms and growing organisations benchmark sound risk management practices and better understand regulatory expectations to manage risks and enhance consumer protection.
The FCA's findings focused on three topics where areas for improvement were identified:- High-risk investments (HRIs). Most firms offering HRIs were able to clearly categorise their products, while some firms did not have sufficient processes in place to ensure HRIs were only sold to clients if they are appropriate. The findings included specific commentary in relation to financial promotions, product, investor and client categorisation and investor assessments and controls.
Read more.Topic : Prudential Regulation -
PRA consults on withdrawal of SS20/15: Supervising building societies' treasury and lending activities
8 May 2025
The Prudential Regulatory Authority (PRA) has published a consultation paper (CP/11/25) proposing the deletion of supervisory statement (SS) 20/15, which outlines the supervision of building societies' treasury and lending activities. SS20/15 sets out the PRA's expectations for building societies to comply with the Building Societies Act 1986, the Financial Services and Markets Act 2000, the PRA Rulebook and SS24/15. The PRA conducted a review and concluded that SS20/15 is inconsistent with its broader policy approach and creates a level playing field issue by imposing prescriptive expectations on building societies that banks do not face. In addition, risk management in the building societies sector has advanced since SS20/15 with the PRA now having various tools to supervise firms. As a result, the PRA is proposing to withdraw SS20/15.
Read more.Topic : Prudential Regulation -
CTPs brought into scope of ESMA rules for DRSP fines and fees
7 May 2025
The European Commission has adopted delegated regulations amending the rules for data reporting service providers (DRSP) fines and fees to include consolidated tape providers (CTPs) in scope. Previously, the relevant requirements had only been applied to two types of DRSPs: approved publication arrangements and approved reporting mechanisms. The amendments are in line with the changes brought in as a result of the EU MiFID/MiFIR review changes which focussed on enhancing market data transparency and removing obstacles to the emergency of CTPs in the EU.
Read more.Topic : MiFID II -
ESMA final report on technical advice for MAR and MiFID II SME Growth Markets
7 May 2025
The European Securities and Markets Authority (ESMA) has published its final report providing technical advice to the European Commission (EC) on changes made by the Listing Act to the Market Abuse Regulation (MAR) and the Markets in Financial Instruments Directive (MiFID II) in relation to small and medium enterprise (SME) growth markets. The Listing Act seeks to promote better access to public capital markets for EU companies, in particular SMEs, by simplifying requirements and reducing administrative burden. ESMA consulted on the advice in December 2024 and this final report includes feedback received in response to the consultation. Much of the MAR technical advice concerns the rules for disclosing inside information during a protracted process. It also covers the approach for identifying trading venues with a significant cross-border dimension under the new cross market order book mechanism (article 25a MAR). The MiFID technical advice concerns the category of multilateral trading facilities (MTF) labelled SME growth markets and the requirements that such an MTF (or MTF segment) must comply with under article 33 MiFID II. In giving its technical advice, ESMA suggests amendments to Commission Delegated Regulation 2017/565 (known as the MiFID Org Reg) or otherwise confirms its view where no amendments would be needed. The EC will adopt the delegated acts for which the technical advice was requested by July 2026. -
EBA updates technical standards on resolution planning reporting
7 May 2025
The European Banking Authority (EBA) has published its final report on the draft implementing technical standards (ITS) on resolution planning reporting, together with a press release. Firms must provide necessary information to resolution authorities, as mandated by the Bank Recovery and Resolution Directive, to develop resolution plans. The ITS outlines procedures, standard forms and templates for the provision of information required by resolution authorities to draw up these plans. This comprehensive review of the ITS aims to achieve full harmonisation and simplification of EU reporting requirements, reducing compliance costs by avoiding duplication of data requests and eliminating data points that are either redundant or of limited value.
Read more.Topic : Recovery and Resolution -
FCA consultation on simplifying mortgage lending rules
7 May 2025
The UK Financial Conduct Authority (FCA) has published a consultation paper (CP25/11) on simplifying its rules on mortgage lending and increasing flexibility, with an updated webpage and press release. This is the first set of proposals made through the Mortgage Rule Review (MRR), and forms part of the FCA's 5-year strategy. The FCA is proposing to amend its mortgage advice and selling standards, and its affordability rules for mortgage term reductions and remortgaging. The FCA also proposes to retire two pieces of non-handbook guidance (FG13/7 and FG24/2). Broadly, the proposals seek to make mortgage regulation simpler; reducing the different sources firms have to check to understand the regulatory expectations; and will streamline processes, reduce costs and promote competition. For consumers, it is hoped that the changes will make it easier to: (i) engage with mortgage providers; (ii) reduce mortgage terms, lowering the total cost of borrowing and reducing the balance of mortgage debt taken into later life; and (iii) access the cheapest products available when remortgaging. The deadline for comments is 4 June and the FCA aims to publish its policy statement in Q3 2025. In addition, the FCA plans to launch a public discussion on the future of the mortgage market in June, covering: (i) risk appetite and responsible risk taking; (ii) alternative affordability testing and product innovation; (iii) lending into later life; and (iv) consumer information needs.Topic : Consumer / Retail -
FCA policy statement on new regulatory return for consumer credit firms
7 May 2025
The UK Financial Conduct Authority (FCA) has issued a final policy statement (PS25/3) on consumer credit regulatory returns, published together with an updated webpage. The FCA is introducing a new regulatory return for consumer credit firms engaging in one or more of the regulated activities of credit broking, debt adjusting, debt counselling services and providing credit information services. The rules were previously consulted on in September 2024 in CP24/19 (for further background on this, please see our update). The return aims to collect tailored data on firms' operations, consumer engagement and use of permissions to allow the FCA to achieve its strategic objectives and be more efficient and effective in regulating the sector. The feedback to the consultation was largely positive. Most comments focussed on the scope of the data elements and clarifying the FCA's expectations. In response to the feedback, the FCA has reduced the number of questions in the return by 27% and has made changes to the rules making them clearer and more effective. This includes: (i) removing questions requiring data from lenders; (ii) changing the data required from credit brokers from successful applications to total introductions; and (iii) allowing firms to annualise data for the first reporting period if they do not have all the required data for the whole year. The FCA intends to review and replace returns for firms undertaking other consumer credit activities but will be delaying the implementation of remaining phases. This will reduce the burden on firms and give the FCA time to assess the impact and value of the new return, together with the three new product sales data returns which have already been introduced.Topic : Consumer / Retail -
European Parliament plenary adopts amendments to Benchmarks Regulation
6 May 2025
The European Parliament has confirmed it has adopted the regulation amending the Benchmark Regulation (for background, please see our update). The regulation will apply to benchmarks defined as critical or significant, include certain commodity benchmarks, and EU Paris-aligned benchmarks and EU Climate Transition benchmarks. Other benchmarks which reach the EUR20 billion threshold will be subject to a voluntary supervision regime, which aims to promote the use of common standards for climate-related benchmarks. The regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union and will apply from 1 January 2026.Topic : Financial Market Infrastructure -
BoE speech on the digitalisation of money and assets: proposed stablecoin regulatory framework
6 May 2025
The Bank of England (BoE) has published a speech by Sarah Breeden, Deputy Governor for Financial Stability, at the Point Zero Forum. The subject of the speech was the digitalisation of money and assets, and in particular the BoE's focus on interoperability. In terms of general commentary, Ms Breeden highlighted the need to collaborate closely with international partners to ensure safe innovation and support for firms with cross-border transactions. She also emphasised the importance of enabling users to switch seamlessly between different forms of money and across asset classes. To drive interoperability, harmonised technical standards and working with the public sector is needed to understand further how to integrate these new, digital forms of assets and money into the wider financial system.
Read more. -
ESMA response to EC's review of commodity derivatives markets
6 May 2025
The European Securities and Markets Authority (ESMA) has published a response to the European Commission's consultation on the functioning of commodity derivative markets and certain aspects of spot energy markets. ESMA provides its input on the issues identified in the consultation, including inefficiencies and overlaps in reporting under MiFIR, EMIR and REMIT. The response covers the following issues from the consultation paper:- Data harmonisation. ESMA recalls the findings of the EC's 'Fitness Check of EU 2 Supervisory Reporting Requirements' which identified inefficiencies, lack of standardisation and duplications between EMIR, MiFIR and REMIT reporting obligations. ESMA agrees there is a need for streamlining the reporting frameworks.
Read more.Topic : Derivatives -
Consolidated Q&A on PRIIPs KID updated
5 May 2025
The Joint Committee of the European Supervisory Authorities (ESAs) has updated its consolidated Q&A on the EU packaged retail and insurance-based investment products (PRIIPs) key information document. The consolidated document combines responses given by the European Commission in relation to interpretation of Union law with responses given by the ESAs in relation to the application or implementation of the PRIIPs legislation. The Q&A take into account amendments to the legislation made by Commission Delegated Regulation (EU) 2021/2268. The consolidated Q&A also includes three new Q&As as of 5 May, which relate to: (i) MRM class determination; (ii) performance scenarios; and (iii) calculation of the summary cost indicators.Topic : Consumer / Retail -
Delegated regulation amending RTS on supervisory delta of call and commodity risk options published in the OJ
5 May 2025
Commission Delegated Regulation (EU) 2025/855 amending regulatory technical standards (RTS) laid down in Delegated Regulation (EU) 2021/931 as regards the specification of the formula for calculating the supervisory delta of call and put options mapped to the commodity risk category, was published in the Official Journal of the European Union (OJ). The RTS specify the formula for calculating the supervisory delta of call and put options mapped to the commodity risk category. This is based on the approach taken in the Basel Framework (CRE52) and for the purposes of Article 279a(3) of the EU Capital Requirements Regulation (CRR) in the standardised approach for counterparty credit risk. CRR III expanded the scope of Article 279a(3) to cover commodity risk, which required amendment to the RTS. The regulation will enter into force on the twentieth day following its publication in the OJ.Topic : Prudential Regulation -
FCA discussion paper on regulating cryptoasset activities
2 May 2025
The UK Financial Conduct Authority (FCA) has published a discussion paper (DP25/1) on proposals for regulating cryptoasset activities, with a new webpage and press release. The FCA is seeking to develop a safe, competitive and sustainable crypto sector in the UK that enables innovation and is underpinned by market integrity, in light of the increasing popularity of cryptoassets with UK consumers. The proposals cover the following areas being brought within the FCA's regulatory remit, in line with the draft statutory instrument (SI) and policy note published previously:- Cryptoasset trading platform. These are entities that will be authorised to operate a qualifying cryptoasset trading platform. The proposed policy has been informed by the current rules and obligations applied to trading venues in traditional financial markets.
Read more.Topic : FinTech -
FCA Handbook Notice 129
2 May 2025
The UK Financial Conduct Authority (FCA) has published Handbook Notice 129 which sets out changes to the classes of derivatives subject to the derivatives trading obligation (DTO), following policy statement PS25/2 published in April (please see our update). The DTO requires certain financial and non-financial counterparties to trade specific standardised and liquid over-the-counter (OTC) derivatives on regulated trading venues or equivalent third-country venues. The FCA determines the classes of derivatives that are subject to the DTO. The FCA has decided to expand the classes of secured overnight financing rate overnight index swaps (SOFR OIS) to increase the benefits of on-venue trading. It also establishes a new framework to provide exemptions from the DTO for transactions arising from the use of post-trade risk reduction (PTRR) services. The PTRR services now expand beyond portfolio compression and exemptions have been extended so they are also not subject to best execution and trading venue authorisation obligations, in addition to the current DTO exemption. The changes are set out in the following draft instruments:- Technical Standards (Markets in Financial Instruments Regulation) (Derivatives Trading Obligation and Transparency) (Amendment) Instrument 2025, amending Commission Delegated Regulation (EU) 2017/2417 with regards to regulatory technical standards on the trading obligation for certain derivatives.
- Markets in Financial Instruments Regulation (Post-trade Risk Reduction Services Rules) (Amendment) Instrument 2025, amending the glossary and GEN Sch 4 in the Handbook. It also introduces a new chapter MAR 12 containing the relevant rules.
Both instruments come into force on 30 June.Topic : Derivatives -
ECB survey on euro-denominated securities financing and OTC derivatives
2 May 2025
The European Central Bank (ECB) has published the results of its latest survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives, with a press release. The survey is a qualitative survey conducted every three months among large banks and dealers active in the relevant euro-denominated markets. The results are from the March 2025 survey, which covered changes in credit terms between December 2024 and February 2025. Key findings include: (i) overall credit terms remained largely unchanged during the relevant period; (ii) financing rates/spreads and haircuts in securities financing transactions decreased across most asset classes; and (iii) demand for funding secured against domestic government bonds decreased for the first time since 2021. The survey also highlights there were no net changes to price terms, with only minor net changes to non-price terms, as well as a slight increase found in hedge funds with regards to the use of financial leverage. For the various types of non-centrally cleared OTC derivatives, few changes were recorded for initial margin requirements, credit limits and liquidity. However, respondents pointed out a change with regard to the duration and persistence of valuations disputes, which decreased across all types of derivatives.Topic : Derivatives -
BoE official launch of AI consortium
2 May 2025
The Bank of England (BoE) has announced the launch of the AI Consortium. The consortium will provide a space for public-private engagement to gather input from stakeholders on the capabilities, development, deployment and use of AI in UK financial services (for further background, please see our update). The terms of reference set out further information on how the platform will operate. It confirms that meetings will take place quarterly and members may propose forming workshops to conduct in-depth and/or technical examinations of specific subjects of relevance to the consortium. The BoE and UK Financial Conduct Authority (FCA) may publish summaries of discussions but not the workshop outputs. Workshop members can publish findings with prior permission from the BoE and FCA, though such permission does not imply endorsement. The Consortium will be co-chaired by senior officials from the BoE and the FCA, with no decision-making capacity. The BoE and FCA will not consider their own use of AI and will not be obliged to act on Consortium discussions or outputs.Topic : Artificial Intelligence -
PSR annual plan and budget
1 May 2025
The UK Payment Systems Regulator (PSR) has published its annual plan and budget for 2025/26. The foreword by Aidene Walsh, Chair of the PSR, references the government's announcement to incorporate the PSR into the FCA and how, while full transfer of responsibilities requires legislation, the PSR has where sensible already commenced the process of further alignment and consolidation with the FCA as it awaits the outcome of the consultation being run by HM Treasury (HMT) in the coming months. David Geale, Managing Director, reiterates that HMT has made it clear that the PSR retains its full suite of powers pending changes in legislation, and the PSR intends to use them to deliver against its work programme and commitments. This includes completing phase one of the rollout of variable recurring payments, completing an evaluation of its APP reimbursement requirements, implementing the remedies following its card reviews and working with industry to unlock innovation and growth. The PSR will work with the Bank of England to drive infrastructure upgrades, as per the direction set by the government in the National Payments Vision (NPV). You may like to see our article, "Payment Services and Payment Systems" in which we discuss, among other things, the NPV in more detail. -
FCA findings on international payment pricing transparency
1 May 2025
The UK Financial Conduct Authority (FCA) has published examples of good and poor practices following its review into international payment pricing transparency. Under the consumer duty, in line with the FCA's Handbook (PRIN 2A.5.3R), firms are required to communicate information to retail customers in a way which is clear, fair and not misleading. The FCA reviewed the websites of a sample of firms offering UK customers international money remittance and cross-border payments and found that only some firms clearly displayed the amount recipients would receive, along with detailed fees and charges. Many firms did not, making it difficult for customers to compare prices and make informed decisions. Transaction fees, additional intermediary bank fees and variable fees were also not usually clearly displayed. As a result of these findings, the FCA sets out examples of good and bad practices to help firms improve their communication practices with consumers and deliver better outcomes for retail customers. The FCA expects firms to comply with their obligations under the consumer duty by regularly monitoring the effectiveness of their communications, to assist consumers in understanding costs and making informed decisions. The FCA is likely to undertake future work in the area to understand what improvements have been made. -
FMSB Spotlight Review on Uncleared Margin for OTC Derivatives
1 May 2025
The Financial Markets Standards Board (FMSB) has published a spotlight review on ways to improve uncleared margin for over-the-counter (OTC) derivatives, along with a press release. It builds on findings from the Bank of England's Post-Trade Task Force, which highlighted multiple inefficiencies in its report 'Charting the Future of Post-Trade' published in April 2022. This review specifically focused on uncleared margin practices for bilaterally negotiated OTC traded derivatives, where clearing and settlement is also carried out noncentrally between the two parties. The working group generally agreed on the drivers of inefficiencies, but there were differences of opinion on the scale of these problems, and their potential solutions and viability. It conducted a survey to draw out the extent of agreement on a range of problems and their potential solutions to emphasise the specific topics which the industry may have the most success in taking forward in the future.
Read more.Topic : Derivatives -
ESMA report on the quality and use of data
30 April 2025
The European Securities and Markets Authority (ESMA) has published its 2024 report, along with a press release, on the quality and use of data, showcasing significant increase in data use by authorities. The report covers datasets from the European Market Infrastructure Regulation (648/2012) (EMIR), the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR), the Markets in Financial Instruments Regulation (600/2014) (MiFIR), the Securitisation Regulation (2017/2402/EU), the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) and the Money Market Funds Regulation ((EU) 2017/1131) (MMF Regulation). This edition also expands the scope to include the European Single Electronic Format (ESEF) data and short-selling data. The report is divided into different sections.
Read more. -
FMSB Statement of good practice on the governance of sustainability-linked products
30 April 2025
The Financial Markets Standards Board (FMSB) has issued a Statement of Good Practice (SoGP) on the governance of sustainability-linked products (SLPs), along with a press release. SLPs are products where the financial and/or structural characteristics can vary depending on whether the user (i.e., borrower or issuer of, or counterparty to, SLPs) achieves specific sustainability or ESG objectives. They can be used for general corporate purposes, which allows many users (e.g., borrowers, issuers or counterparties to SLPs) to access the sustainable finance market in a more flexible way. With the growth of SLP issuances and accompanying concerns around the credibility of such instruments, the SoGP is intended to: (i) codify good practices for the governance of SLPs and (ii) support the adoption of consistent governance approaches across asset classes and jurisdictions. This is aimed to enhance the quality and integrity of SLPs; boost market confidence; help mitigate greenwashing risk; and support the development of a deeper, more robust sustainability-linked product market. The SoGP will apply to service providers (e.g., firms acting as sustainability-linked loan lenders, bookrunners or lead arrangers on a sustainability-linked bond issuance or counterparties to a sustainability-linked derivative) or users of SLPs in wholesale financial markets and to support, and be read in conjunction with, existing asset-class specific guidance (notably ICMA, LMA and ISDA principles). -
FCA update on supervisory correspondence
30 April 2025
The UK Financial Conduct Authority (FCA) has updated its webpage on supervisory correspondence in light of its recent announcement that it will no longer be issuing portfolio letters (for details, please see our update). The update provides a place holder for market reports that will be published annually and replace portfolio letters in detailing the risks and opportunities the FCA sees. Additionally, it confirms that most supervisory correspondence pre-dating April 2022 has been marked by the FCA as 'historical' and no longer current. The FCA does not expect firms to refer to these historical letters when interpreting the FCA's current supervisory expectations. But the page includes a link to these historical letters for reference. -
BoE revokes simplified obligations standards 2019/438
30 April 2025
The Bank of England (BoE) has published the Bank Resolution Standards Instrument: The Technical Standards (Simplified Obligations) Instrument 2025 revoking UK Commission Delegated Regulation (EU) 2019/348, containing technical standards on simplified obligations (SO-UKTS). Following the UK's withdrawal from the EU, the UK retained the EU Framework for determining the level of information required within recovery and resolution plans. This included the process in the SO-UKTS to determine whether 'Simplified Obligations' (SO) can be imposed in respect of such plans. The BoE has found that the assessment prescribed in the SO-UKTS identifies the same firms as the process that results in the setting of a preferred resolution strategy of modified insolvency. Accordingly, the BoE has determined that it can achieve the same outcomes using this more efficient, existing process instead of the duplicative SO-UKTS process. The ability to apply SO and any consequential benefits to firms from SO will not be affected; the Bank only proposes to simplify the process whereby a firm is designated as eligible for SO. The updated webpage confirms that the BoE did not receive any formal responses or queries on its December 2024 consultation and consequently is proceeding with the revocation as consulted on. The instrument came into force on 30 April.Topic : Recovery and Resolution -
EBA consults on amendments to RTS for risk weights on immovable property exposures
30 April 2025
The European Banking Authority (EBA) has issued a consultation paper on draft regulatory technical standards (RTS) amending Delegated Regulation (EU) 2023/206, supplementing Regulation (EU) No 575/2013 (CRR). The EBA is mandated by Article 124(11) of the CRR to draft RTS which specify: (i) the types of factors to be considered by national authorities in assessing the appropriateness of the risk weights for exposures secured by immovable property; and (ii) the conditions to be considered for the assessment of the appropriateness of minimum loss given default values for exposures secured by immovable property. The proposed amendments aim to align the RTS with the revised CRR (CRR3) framework. The deadline for comments on the consultation is 30 May. The final report on the RTS is due by 10 January 2026.Topic : Prudential Regulation -
BCBS updates principles for the management of credit risk
30 April 2025
The Basel Committee on Banking Supervision (BCBS) has published a revised version of its principles for the management of credit risk, which serve as guidelines for banking supervisory authorities to assess banks' credit risk management processes. The updated principles, published alongside a press release, reaffirm the guidelines first established in 2000 while making limited technical amendments to align with the current Basel Framework and recent Committee guidance. The principles focus on four key areas: (i) establishing a suitable credit risk environment; (ii) operating under a sound credit-granting process; (iii) maintaining an appropriate credit administration, measurement and monitoring process; and (iv) ensuring adequate controls over credit risk. The update to the guidelines follows a review mandated by BCBS in July 2023, confirming the ongoing relevance of the credit risk principles, and incorporates feedback from a consultation held earlier this year (for background, please see our update). The update is not intended to change the content of the principles or cover new topics.Topic : Prudential Regulation -
PRA consults on updated supervisory expectations to manage climate-related risks
30 April 2025
The Prudential Regulation Authority (PRA) has issued a consultation paper (CP10/25) and draft updates to the supervisory statement 3/19. The consultation aims to enhance supervisory expectations on the management of climate-related risks by banks and insurers due to the growing impact of climate change. This consultation was also announced in a speech given by David Bailey, Executive Director of Prudential Policy at the BoE, at the Climate Financial Risk Forum. The proposals cover: Governance. Enhancing existing governance expectations in SS3/9, clarifying the applications of these policies for climate-related risk and emphasising the board's responsibility to set and own the overall business risk appetite for climate. The proposals include new expectations to ensure alignment between a firm's strategy and meeting its own climate targets that have been adopted, and on setting the internal controls environment.
Read more.Topic : Prudential Regulation -
ECON draft report on safeguarding and promoting financial stability amid economic uncertainties
30 April 2025
The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published a draft report on safeguarding and promoting financial stability amid economic uncertainties. The draft report emphasises the importance of financial stability as a cornerstone of the EU's economic resilience, particularly in the face of geopolitical uncertainty, heightened market volatility and structural changes. It calls for a well-integrated Capital Markets Union (CMU) to enhance investment flows and economic resilience while balancing these benefits with adequate safeguards to mitigate potential risks. There are several macro-financial risks identified, including rising sovereign debt levels, exposure to external shocks and vulnerabilities in the non-bank financial intermediation (NBFI) sector. To address these concerns, it stresses the need for robust crisis preparedness mechanisms, enhanced financial supervision, effective coordination between macro-prudential supervisors, access to granular data and an ability to respond quickly to emerging risks. It also advocates stronger cooperation with international financial bodies to manage cross-border risks and ensure a coordinated response to financial instability. -
ESMA final guidelines on preventing and detecting market abuse under MiCAR
29 April 2025
The European Securities and Markets Authority (ESMA) has published its final report on the guidelines on supervisory practices for National Competent Authorities (NCAs) to prevent and detect market abuse under the Market in Crypto Assets Regulation (MiCAR), together with a press release. The guidelines are based on Article 92(3) of MiCAR and outline general principles for supervisory practices, drawing on the experience gained under the Market Abuse Regulation. They require supervisory activity to be risk-based and proportionate, aiming for NCAs to foster a common supervisory culture specific to cryptoassets through open dialogue with the industry and collaboration among other NCAs. The guidelines also consider the specific features of crypto trading, such as its cross-border nature and the intensive use of social media. The guidelines will be translated into all EU languages and published by ESMA, becoming effective three months later. ESMA advises NCAs to begin implementing the principles immediately. Competent authorities must notify ESMA within two months of the guidelines being published in all EU languages, on whether they (i) comply, (ii) do not comply, but intend to comply or (iii) do not comply and do not intend to comply with the guidelines.Topic : FinTech -
ESMA issues guidelines on the enforcement of sustainability information
29 April 2025
The European Securities and Markets Authority (ESMA) has published official translations of the guidelines, on the enforcement of sustainability information under the Transparency Directive (for background, please see our update). The guidelines are based on Article 28d of the Transparency Directive and aim to establish consistent and effective supervisory practices for all competent authorities to ensure that sustainability information provided by issuers, who have securities admitted to trading on a regulated market and who are required to publish sustainability information under the Accounting Directive, comply with the requirements of Article 24(4) of the Transparency Directive. The guidelines cover, among other things: (i) the objective of enforcement, (ii) ensuring an effective enforcement process, (iii) sustainability information prepared under equivalent third country sustainability reporting requirements, (iv) enforcers maintaining adequate independence from all stakeholders, and (v) the choice of enforcement actions. The guidelines shall apply to the enforcement of sustainability information published from 1 January. Competent authorities must notify ESMA within two months whether they (i) comply; (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the guidelines, along with their reasons for not complying.Topic : Sustainable Finance -
EC adopts RTS on Market Abuse under MiCAR
29 April 2025
The European Commission (EC) has adopted a Delegated Regulation supplementing Regulation (EU) 2023/1114 on markets in cryptoassets (MiCAR), with regard to regulatory technical standards (RTS) specifying the arrangements, systems and procedures for persons to prevent, detect and report market abuse, the templates to be used for reporting suspected market abuse and the coordination procedures between competent authorities for the detection and sanctioning of market abuse in cross-border market abuse situations. Article 92(1) of MiCAR mandates that persons professionally arranging or executing transactions (PPAETs) in cryptoassets must have effective arrangements, systems and procedures to prevent and detect market abuse. These persons are required to report any reasonable suspicion of market abuse to the competent authority. This includes suspicions regarding an order or transaction, as well as other aspects of the functioning of the distributed ledger technology, where there may be indications that market abuse has been committed, is being committed or is likely to be committed. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union. -
FCA update on extending SDR regime to portfolio managers
29 April 2025
The UK Financial Conduct Authority (FCA) has updated its webpage summarising feedback to its consultation paper, CP24/8, on extending the sustainability disclosure requirements (SDR) and labelling regime to portfolio managers. This follows a previous update from the FCA, which announced it would no longer publish a policy statement this year. Key feedback to the consultation paper covers proposals on scope, implementation deadlines, labelling portfolios, naming and marketing and disclosures. While there is broad support for the proposals, the feedback highlights the need for more time to address practical challenges and ensure effective implementation of the regime before introducing requirements. As such, the FCA has decided it is not the appropriate time to finalise the rules on extending SDR to portfolio management. The FCA will instead prioritise the multi-firm review into model portfolio services to ensure compliance with the consumer duty and improve good outcomes from model portfolio services. Firms are also reminded to adhere to the anti-greenwashing rule, effective from 31 May 2024.Topic : Sustainable Finance -
FCA proposes to launch AI live testing service
29 April 2025
The UK Financial Conduct Authority (FCA) has released an engagement paper, together with a press release, on proposals to launch AI live testing as part of the AI Lab. AI live testing will be open to all firms who have established proofs of concept and provide and support financial services in the UK, with voluntary participation based on prescribed competitive selection criteria. The aim is to promote the safe and responsible adoption of AI in UK financial services. The live testing service will enable firms to collaborate with the FCA to check that their new AI tools are ready for use, while also providing the FCA with valuable insights into the potential impacts of AI on UK financial markets. The proposed live testing service would run for 12 to 18 months. The engagement paper reports that the FCA proposes to commence AI live testing in summer 2025, with the application process opening in early summer. The accompanying press release suggests a launch in September. The deadline for comments is 10 June.Topic : Artificial Intelligence -
HM Treasury publishes draft order for cryptoasset regulation
29 April 2025
The HM Treasury (HMT) has published a draft of The Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, together with an accompanying policy note. The policy note explains that the draft statutory instrument:- Amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ("the RAO") to (i) define "qualifying cryptoassets" and "qualifying stablecoin", and classify them as specified investments under the Financial Services and Markets Act 2000 ("FSMA"); and (ii) specify certain activities related to these assets as regulated activities, such that persons carrying on those activities need to be authorised for that activity by the FCA.
Read more.Topic : FinTech -
IOSCO – CPMI report assessing EU implementation of Principles for Financial Market Infrastructures
28 April 2025
The International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI) has published a report, alongside a press release, evaluating the EU's implementation of the Principles for Financial Market Infrastructures (PFMI) for systemically important payment systems (PSs), central securities depositories (CSDs) and securities settlement systems (SSSs), collectively referred to as "financial market infrastructures" (FMIs). The report sets out conclusions using a level 2 peer assessment to determine whether, and to what degree, the contents of the EU's legal, regulatory and oversight framework are complete and consistent with the PFMI. Due to the distinct regulatory frameworks for PSs in the euro area and Sweden, which differ from the EU-wide regime for CSDs/SSSs, they were assessed individually. The report concludes that the EU's legal, regulatory and oversight frameworks are complete and consistent with the PFMI in most aspects for PSs, although identified areas for improvement, particularly in risk and governance principles relating to CSDs and SSSs. The assessment reflects the status of implementation as of 30 October 2019, although Annex C to the report discusses the EU's amendments to the CSR Regulation (CSDR Refit) and concludes that this leads to an even greater consistency of the EU regulatory framework with the PFMI and will help authorities address some of the gaps identified in this assessment. -
HMT announces new rules for bank account closures and payment service terminations
28 April 2025
The HM Treasury (HMT) has published a draft statutory instrument introducing new rules requiring banks and payment service providers (PSPs) to give customers at least 90 days' notice before closing their account or terminating a payment service—an increase from the two months currently required. The draft Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 is accompanied by an explanatory memorandum, and aims to protect customers from arbitrary account closures and ensures they receive a clear, written explanation, allowing them to challenge decisions through the Financial Ombudsman Service. The new rules will also support small businesses by providing more time to find alternative banking solutions, reinforcing the government's commitment to economic growth and security under the Plan for Change. Subject to Parliamentary approval, the legislation is expected to come into force in April 2026 and will apply to all PSPs terminating payment service contracts without a definite expiry date, including bank account closures, for contracts agreed from and including 28th April 2026. Certain exceptions will apply, for example, to enable PSPs to comply with their obligations under financial crime law. -
Key elements of the 2025 CCP Stress Test
25 April 2025
The Bank of England (BoE) has published key elements to its 2025 Stress Test of UK Central Counterparties (CCPs), along with a spreadsheet containing the relevant market stress scenarios. This exercise, the fourth of its kind, aims to assess the financial resilience of UK CCPs by simulating severe market stress scenarios, including the default of two or more of its members. The test will be centred on a bespoke baseline stress scenario, which is an extreme but plausible hypothetical scenario, equivalent to a one-in-3,500 event. It will also include three additional 'multiplier' scenarios for sensitivity and reverse stress testing purposes and will further consider the impact on the wider financial system via initial margin and variation margin calls. This year's exercise will not include a full liquidity stress test but will explore and assess liquidity risks with firms in a more qualitative manner. The BoE will also be exploring a wider range of hypothetical scenarios, including more extreme scenarios and those that break historic correlations, and will use its own independent 'desk-based' modelling to undertake the revaluation of clearing member and client positions in these scenarios. CCPs must submit the necessary data for the 2025 Stress Test to the BoE using data templates and instructions provided privately to them. The results, which will be published in Q4 2025, will support and inform the BoE's supervisory and regulatory activities to address potential areas of risk.Topic : Financial Market Infrastructure -
EBA draft RTS for CASPS appointing a central contact point under MLD4
25 April 2025
The European Banking Authority (EBA) has issued its final report on draft regulatory technical standards (RTS) amending Commission Delegated Regulation (EU) 2018/1108, on the criteria for the appointment of central contact points for electronic money issuers and payment service providers and with rules on their functions under Article 45(10) of Directive (EU) 2015/849 (MLD4). The draft RTS extend the amended Delegated Regulation to define when cryptoasset service providers (CASPs) must appoint a central contact point. A central point contact can help to ensure compliance with local Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) obligations in cases where a CASP authorised in one EU Member State is providing services to another EU member state. The RTS set out: (i) the conditions under which CASPs should appoint a central contact point; and (ii) the roles and responsibilities of that central contact point. The draft RTS will be submitted to the Commission for endorsement, following which it will be put to the European Parliament and the Council for scrutiny, before being published in the Official Journal of the European Union. -
EBA releases ESG dashboard with key indicators on climate risk in the EU/EEA banking sector
25 April 2025
The European Banking Authority (EBA) has released an ESG dashboard, accompanied by a press release, establishing a comprehensive framework to improve the monitoring of climate-related risks within the EU/EEA banking sector. This tool provides centralised access to climate risk indicators and benchmarks, enhancing the assessment and oversight of both transition and physical climate-related risks based on data disclosed by banks through their Pillar 3 ESG disclosures in line with Commission Implementing Regulation (EU) 2021/637. The dashboard includes indicators related to: (i) climate-related transition risk, (ii) physical risk, (iii) exposures secured by immovable property collateral, and (iv) the alignment of EU and EEA banks with the EU Taxonomy. The EBA plans to regularly update and evolve the indicators over time and reflect ongoing revisions to the Pillar 3 disclosure templates in future updated versions.Topic : Prudential Regulation -
EC launches channel for reporting financial market integration barriers in the EU
24 April 2025
The European Commission (EC) has launched a dedicated channel for reporting barriers to financial market integration within the EU Single Market. This initiative, which announced in the Savings and Investments Union (SIU) Communication adopted in March, invites market participants, individuals or businesses to provide information on any existing obstacles that affect the functioning of the single market for savings and investments. This includes issues that affect the seamless flow of cross-border capital, reduce the ease of doing business across the EU or impose excessive red tape and complex regulatory settings. Issues that may be reported include, but are not limited to, market fragmentation, divergent supervisory practices, licensing and freedom of doing business (including discriminatory practices) and overly burdensome or repetitive reporting requirements. Feedback is invited via a designated email and the EC commits to regularly monitor the feedback and use it to tackle existing obstacles to financial market integration and free movement of capital, with the aim of further advancing the SIU. The EC notes that this channel is not a formal complaint submission mechanism and stakeholders should not expect to receive an individual reply or feedback from the EC.Topic : Other Developments -
FCA announces changes to simplify supervisory communications
24 April 2025
The UK Financial Conduct Authority (FCA) has announced it will no longer be issuing and publishing portfolio letters from 30 April. Instead, these will be replaced with a small number of market reports. The market reports will include communications relevant to different types of firms and insights from the FCA's supervisory work. This change aligns with the FCA's Consumer Duty Requirements Review, which aims to streamline supervisory priorities to support the FCA's commitment to smarter, more effective regulation. Many existing portfolio letters and Dear CEO letters which pre-date the FCA's strategy 2022-25 will be withdrawn at the end of April and clearly marked as 'historical' and no longer current on the FCA website. Historical documents will remain publicly accessible at existing links. The FCA advises that until market reports are published later this year, firms should continue to refer to relevant portfolio petters and Dear CEO letters for guidance. The FCA will still use Dear CEO Letters to notify senior managers about significant issues that require action. -
FCA consultation on definition of capital for FCA investment firms
24 April 2025
The UK Financial Conduct Authority (FCA) has published a consultation paper (CP25/10), along with a press release and an updated webpage, proposing to remove all references to the UK Capital Requirements Regulation (UK CRR) from the definition of regulatory capital, also known as 'own funds', that applies to FCA investment firms within MIFIDPRU 3. The aim is to reduce regulatory burden and enhance clarity, making the framework more accessible for investment firms and easier for them to apply the requirements. The proposals do not change the rules about how much capital firms must hold but focus on simplifying and consolidating the existing rules about what qualifies as regulatory capital. The changes would reduce the volume of legal text by 70% with clear application for investment firms. The FCA also outlines its plan to establish a more integrated approach to prudential regulation by simplifying the own funds rules and incorporating them into the FCA Handbook. This involves: (i) consolidating requirements into MIFIDPRU 3, (ii) removing provisions that are only relevant for banks, and (iii) making requirements clearer and more accessible. A draft of the instrument that would make the proposed changes to MIFIDPRU and the Glossary, the Definition of Capital for Investment Firms Instrument 2025, is set out in Appendix 1 to CP25/10. The deadline for comments is 12 June, with final rules expected to be published in H2 2025 and the new framework expected to come into force on 1 January 2026.Topic : Prudential Regulation -
FSB Chair Letter to G20 Finance Ministers
23 April 2025
The Financial Stability Board (FSB) has published a letter, along with a press release and webpage, from its Chair, Klaas Knot, to G20 finance ministers and central bank governors ahead of their meeting on 23-24 April. The letter addresses the progress made in tackling global challenges to financial stability and outlines priorities for the future to prevent instability, enhance the resilience of the global financial system and support growth. The key areas of progress are:- Ensuring financial stability through periods of turmoil. The FSB will continue to learn from vulnerabilities caused by previous events such as the banking stress of March 2023 and the COVID-induced market turmoil of March 2020, to ensure effective monitoring of the financial system. The FSB recognises the importance of strengthening the resilience non-bank financial intermediation (NBFI) and aims to deliver policy recommendations in July to the G20, to address financial stability risks arising from leverage in NBFI.
Read more.Topic : Other Developments -
FCA webpage for international wholesale firms looking to undertake business in UK
23 April 2025
The UK Financial Conduct Authority (FCA) has published a new webpage for international wholesale firms seeking authorisation to operate in the UK under the Financial Services and Markets Act 2000 (FSMA). The page seeks to signpost firms to relevant resources and issues to consider, including the minimum standards for authorisation and the FCA's expectations of and approach to international firms. -
EC adopts Delegated Regulation on RTS for supervisory colleges
23 April 2025
The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Directive IV (CRD IV), containing regulatory technical standards (RTS) specifying the general conditions for the functioning of supervisory colleges, and repealing Commission Delegated Regulation (EU) 2016/98. Article 116 of CRD IV sets out provisions requiring consolidating supervisors to establish colleges of supervisors to facilitate certain supervisory tasks and to ensure appropriate coordination and cooperation with relevant third-country supervisory authorities. In addition, the competent authorities supervising an institution with significant branches in other Member States are, pursuant to Article 51(3) of CRD IV required to establish and chair colleges of supervisors where Article 116 is not applicable. Article 51(4) of the CRD IV empowers the Commission to adopt delegated acts specifying the general conditions for the functioning of colleges of supervisors. This Delegated Regulation repeals and replaces Delegated Regulation 2016/98 to account for amendments to CRD IV (e.g., in relation to the authorisation of certain financial holding companies and mixed financial holding companies, the establishment of intermediate EU parent undertakings, and removal of investment firms from the scope of CRD IV). It also includes new articles on the exchange of information with the observers of the supervisory college, specifically with resolution colleges and anti-money laundering (AML) and counter-terrorism financing (CFT) colleges, to enhance cooperation and information exchange with these authorities. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. The Delegated Regulation enters into force on the twentieth day following its publication in the Official Journal of the European Union.Topic : Prudential Regulation -
EC adopts Delegated Regulation on RTS on extraordinary circumstances under CRR
23 April 2025
The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Regulation (No 575/2013) (CRR), containing regulatory technical standards (RTS) of the conditions and indicators that the European Banking Authority (EBA) is to use when determining extraordinary circumstances under Articles 325az(5) and 325bf(6) of the CRR have occurred. In accordance with Articles 325bf(6) and 325az(5) of the CRR, as amended by CRR 3 (Regulation EU) 2024/1623), competent authorities may permit institutions to derogate from certain requirements of the regulatory framework for the use of internal models, or apply a softer version of those requirements, where, in the opinion of the EBA, a situation of extraordinary circumstances has occurred. In accordance with Article 325az(9) of the CRR, the occurrence of extraordinary circumstances shall be determined by the EBA, which must issue an opinion to that effect. The Delegated Regulation contains RTS which set out a framework for the EBA to follow when identifying a situation of extraordinary circumstances. The RTS specify that such circumstances could be recognised where there is a situation of significant cross-border financial market stress, or a major regime shift associated with a similar level of stress (e.g., a liquidity crisis), that can render the outcome of the back-testing and profit and loss attribution requirements inappropriate. The RTS also contain a non-exhaustive list of indicators that the EBA is to use to assess whether a situation of extraordinary circumstances has occurred. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union.Topic : Prudential Regulation -
PRA consults on restating MiFID Organisational Regulation
23 April 2025
The UK Prudential Regulation Authority (PRA) has published its consultation paper (CP9/25) on the Markets in Financial Instruments Directive Organisational Regulation (MiFID Org Reg). The PRA proposes to restate the current firm-facing requirements from the MiFID Org Reg into the PRA Rulebook before HM Treasury (HMT) begins the revocation of the MiFID Org Reg under the Financial Services and Markets Act 2023 (FSMA 2023), to prevent gaps from arising in the PRA's ability to enforce key components of its systems and controls requirements. The PRA's proposals aim to maintain existing firm-facing requirements without introducing new obligations. The PRA's proposals cover the following Articles of the MiFID Org Reg: (i) general organisational requirements, (ii) outsourcing, (iii) record keeping, (iv) compliance and internal audit, (v) risk management, and (vi) technical standards regulation. The PRA proposes the implementation date for the changes resulting from this consultation paper would be H2 2025. The proposed rules and guidance are set out in Appendix 1 and Appendix 2. As the PRA has not made substantive changes to the rules, the consultation period is 8 weeks and so the deadline for responses is 23 June.Topic : MiFID II -
FCA summary of AI Sprint
23 April 2025
The UK Financial Conduct Authority (FCA) has published a summary of its AI Sprint, a two-day event that was hosted in January which discussed the opportunities and challenges of AI in financial services. 115 participants took part, discussing how AI may develop in financial services over the next five years, and the FCA's role enabling firms to embrace the benefits of AI while also managing the risks. Four common themes came from participants' discussions and suggestions:- Regulatory clarity. Participants emphasised the importance of firms understanding how current regulatory frameworks apply to AI. Teams proposed specific areas where the FCA could clarify or expand on existing requirements to help firms understand regulatory expectations and to support beneficial innovation.
Read more.Topic : Artificial Intelligence -
PRA policy statement on identification and management of step-in risk
22 April 2025
The UK Prudential Regulation Authority (PRA) has published a policy statement on the identification and management of step-in risk (PS5/25). The policy statement provides feedback on responses to consultation paper (CP) 23/23 which, among other things, proposed to: (i) introduce new rules where firms are required to develop their own step-in risk policies and procedures based on the relevant Basel Committee on Banking Supervision's (BCBS) guidelines; and (ii) introduce an accompanying supervisory statement also based on the BCBS guidelines, detailing factors that firms are expected to consider when identifying potential step-in risk and in deciding, where necessary, on potential mitigating action.
Read more.Topic : Prudential Regulation -
BoE publishes two new stress test scenarios for 2025 Bank Capital Stress Test
17 April 2025
The Bank of England (BoE) has updated its stress testing webpage, announcing it has published two stress test scenarios for use by banks and building societies that are not participants in its concurrent stress testing exercise. These scenarios have been drawn from the 2025 Bank Capital Stress Test scenario published on 24 March to support concurrent stress testing of the largest UK banks and building societies. The scenarios serve as a template and severity benchmark for firms to support their own internal capital adequacy assessment process (ICAAP) stress testing scenario design processes. The intention behind publishing two different scenarios is to encourage firms to evaluate the type, characteristics and severity of stress their business model may be vulnerable to when designing their own stress testing scenarios. The BoE refers firms to the Supervisory Statement on the ICAAP and the supervisory review and evaluation process (SREP) for guidance on the role of stress testing within the framework for setting banks' and building societies' capital requirements. The BoE explains that firms should use the scenarios as a starting point to build and accurately calibrate their own scenarios under Pillar 2, noting that any single scenario designed for firms with diverse business models and risks has its limitations. Therefore, it expects firms to select scenarios that robustly challenge their business and, ultimately, be responsible for creating their own scenarios to test resilience.Topic : Prudential Regulation