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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UK PRA publishes policy statement on amendments to UK capital buffers framework
3 July 2025
The UK Prudential Regulation Authority (PRA) has published its final policy statement in relation to amendments being made to the UK framework on capital buffers. Together with the Capital Buffers and Macro-prudential Measures Regulations 2025 (Capital Buffer Regulations), published in June, the amendments result in some regulatory material on the UK capital buffers framework being removed from the statute book and replaced by PRA policy material. In addition, the PRA has sought to streamline some of its policy materials on capital buffers, to enhance usability and clarity.
Read more.Topic : Prudential Regulation -
ESMA announces first CTP for bonds in the EU
3 July 2025
The European Securities and Markets Authority (ESMA) has announced the selection of Ediphy (fairCT), a fintech company, as the first consolidated tape provider for bonds in the EU. The decision marks a significant step towards establishing consolidated tapes in the EU, contributing to the development of the Savings and Investment Union and enhancing capital markets in Europe. Ediphy (fairCT), was selected following a thorough assessment process against the criteria listed in the EU Markets in Financial Instruments Regulation. The firm met all eligibility requirements and achieved the highest overall score on the award criteria. ESMA now invites Ediphy (fairCT) to apply for formal authorisation without delay, after which it will operate the CTP for bonds for five years under ESMA's direct supervision.Topic : MiFID II -
HMT publishes revised policy approach to ancillary activities exemption
3 July 2025
HM Treasury (HMT) has published a policy note and draft statutory instrument on the ancillary activities exemption, which is an exemption (originally introduced in the revised EU Markets in Financial Services Directive) from investment firm authorisation requirements for firms that trade commodity derivatives or emission allowances as an ancillary activity to their main business. The exemption is intended for non-financial firms such as energy and other commodity trading firms which are active in both physical trading and financial instrument trading. Currently, firms must determine their eligibility for the exemption and ancillary activities test (AAT), which is burdensome and expensive for firms.
Read more.Topic : MiFID II -
UK FCA proposes new approach to ancillary activities test
3 July 2025
The UK Financial Conduct Authority (FCA) has launched a consultation on its proposed revised approach to the ancillary activities test (AAT). The AAT is the test that firms must conduct to determine whether they can use an exemption (originally introduced under the revised EU Markets in Financial Instruments Directive) from investment firm authorisation requirements for their commodity derivatives or emission allowances trading business which is as an ancillary activity to their main business. The FCA's consultation is published on the same day as HM Treasury announced its revised policy approach to the exemption and the AAT. This approach will give the FCA powers to make rules in relation to the AAT and to set a new annual threshold for activity below which a person can also use the ancillary activities exemption (AAE).
Read more.Topic : MiFID II -
Draft Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 published
3 July 2025
The draft Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 has been laid before the UK Parliament under the Financial Services and Markets Act 2023 (FSMA 2023), together with a draft explanatory memorandum. The draft Regulations form part of the continued process to repeal and replace assimilated EU financial services law following Brexit. Specifically, these Regulations will restate key definitions from Commission Delegated Regulation (EU) 2017/565 (MiFID Org Regulation) into UK law, ahead of its revocation through a pending separate commencement instrument (as announced in the 2024 Mansion House speech). The MiFID Org Regulation sets out detailed organisational and conduct requirements for investment firms, including provisions on client categorisation, best execution, conflicts of interest, outsourcing and internal audit functions. These firm-facing obligations will be replaced by rules developed by the UK Financial Conduct Authority and the UK Prudential Regulation Authority, in line with the FSMA 2023 framework which delegates responsibility for detailed regulatory standards to the regulators. The draft Regulations also seek to modify definitions already within the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to clarify terminology. -
Draft Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 published
3 July 2025
The draft Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 has been laid before the UK Parliament under the Financial Services and Markets Act 2023 (FSMA 2023), together with a draft explanatory memorandum. The draft Regulations form part of the continued process to repeal and replace assimilated EU financial services law following Brexit. Specifically, these Regulations will restate key definitions from Commission Delegated Regulation (EU) 2017/565 (MiFID Org Regulation) into UK law, ahead of its revocation through a pending separate commencement instrument (as announced in the 2024 Mansion House speech). The MiFID Org Regulation sets out detailed organisational and conduct requirements for investment firms, including provisions on client categorisation, best execution, conflicts of interest, outsourcing and internal audit functions. These firm-facing obligations will be replaced by rules developed by the UK Financial Conduct Authority and the UK Prudential Regulation Authority, in line with the FSMA 2023 framework which delegates responsibility for detailed regulatory standards to the regulators. The draft Regulations also seek to modify definitions already within the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to clarify terminology. -
EU T+1 Industry Committee publishes roadmap and opens consultation for capital markets
3 July 2025
The EU T+1 Industry Committee (the Industry Committee) held a summit, presenting its high-level roadmap for transitioning to a shorter T+1 securities settlement cycle, targeted for implementation by 11 October 2027. While there is no formal public consultation on the roadmap or report, there is a feedback phase to gather additional input from stakeholders that may support the Industry Committee's future work. The deadline for comments is 31 August. After the consultation period, firms are encouraged to begin preparing their transition strategies and allocating resources for system upgrades and testing throughout the remainder of the year. -
ECB and AMLA sign MoU to strengthen EU AML supervision
3 July 2025
The European Central Bank (ECB) has published a Memorandum of Understanding (MoU) (dated 27 June) that the ECB has entered into with the European Union's Anti-Money Laundering Authority (AMLA) to enhance cooperation between prudential and anti-money laundering supervision. The MoU establishes practical arrangements for cooperation and information exchange, aiming to enhance supervisory effectiveness, maximise efficiency and avoid duplication of efforts. Under the MoU, the AMLA will directly supervise certain high-risk financial institutions (referred to as "selected obliged entities") that are particularly exposed to cross-border money laundering. These include payment institutions, crypto-asset service providers and, in some cases, banks that also fall under the ECB's prudential supervision. Article 92(3) of the AMLA Regulation requires the AMLA and the ECB to conclude a MoU setting out the practical modalities for cooperation and for exchanging information in the performance of their respective tasks by 27 June. -
ESAs and AMLA sign MoU to strengthen EU AML supervision
3 July 2025
The European Supervisory Authorities (the European Banking Authority, European Insurance and Occupational Pensions Authority and European Securities Markets Authority—the ESAs) have announced the signing of a multilateral Memorandum of Understanding (MoU) (dated 27 June) with the European Union's Anti-Money Laundering Authority (AMLA). The agreement establishes a framework for effective cooperation and information exchange among the four institutions. The MoU outlines practical arrangements for collaboration, aiming to enhance supervisory convergence across the EU's financial sector. It also seeks to facilitate the sharing of relevant information, promote cross-sectoral learning and support capacity building in areas of mutual interest. The agreement is a key component of the AMLA's broader cooperation framework with the financial sector, as required under Article 91 of the AMLA Regulation, which mandates the conclusion of a multilateral MoU with the ESAs by 27 June. -
UK FCA finalises rules on NFM and launches consultation on new Handbook guidance
2 July 2025
The UK Financial Conduct Authority (FCA) has published a consultation paper CP25/18 (CP) on tackling non-financial misconduct (NFM) in financial services, building on its 2023 consultation on diversity and inclusion in the financial sector. The CP is accompanied by a press release and updated webpage. The CP includes a final policy statement in Chapter 2, confirming the extension of existing NFM rules for banks to non-bank financial services firms. These final rules, which come into effect on 1 September 2026, amend the Code of Conduct and the Fit and Proper Test for Employees and Senior Personnel sourcebooks. The changes aim to align expectations across the sector regarding serious misconduct such as bullying, harassment and violence, and clarify when such behaviour constitutes a breach of FCA rules. In addition to finalising these rules, the FCA is consulting on proposed new FCA Handbook guidance to support consistent application of the NFM framework across firms. The deadline for comments is 10 September.Topic : Corporate Governance -
UK FOS publishes annual report and accounts for 2024/25
2 July 2025
The Financial Ombudsman Service (FOS) has published its annual report and accounts for 2024/25, accompanied by a press release. The report highlights a 54% year-on-year increase in complaints, with 305,726 new cases received, the highest volume since the PPI issue in 2018/19. The significant increase is driven primarily by complaints concerning motor finance commission (73,328 cases) and unaffordable lending (71,685 cases), alongside notable increases in fraud and scams. Around half of all complaints were submitted by professional representatives, a sharp increase from 25% the previous year. On average, across all financial products, the FOS upheld 34% of the complaints it resolved, compared to 37% in 2023/24. In response to operational pressures, the FOS confirms it is expanding its workforce, modernising its structure and investing in digital transformation.Topic : Consumer / Retail -
UK APPG publishes report assessing the APP fraud mandatory reimbursement requirement
2 July 2025
The UK All-Party Parliamentary Group (APPG) on Fair Banking has published its latest report, "No Half Measures – A Blueprint to Beat APP Fraud", alongside a press release. The report assesses the UK's response to authorised push payment (APP) fraud and the early impact of the mandatory reimbursement requirement (MRR) introduced by the UK Payment Systems Regulator (PSR) in October 2024. The APPG recognises the MRR as a step forward in consumer protection but emphasises that it is not a complete solution to fraud. Key gaps remain, particularly in areas such as cryptocurrency platforms and international transfers, which remain outside the scope of the current reimbursement framework. The APPG calls for a balanced, system-wide approach, urging collaboration to effectively combat APP fraud rather than placing disproportionate expectations on financial institutions alone. In Q4 2025, there will be an independent one-year review assessing the impact of the MRR, as well as the PSR's wider policy approach to APP fraud.
Read more. -
EU RTS on subcontracting ICT services supporting critical or important functions under DORA published in OJ
2 July 2025
Commission Delegated Regulation (EU) 2025/532 has been published in the Official Journal of the European Union. The Delegated Regulation supplements the Digital Operational Resilience Act (DORA) with regard to regulatory technical standards (RTS) specifying the elements that a financial entity has to determine and assess when subcontracting information and communication technology (ICT) services supporting critical or important functions.
Read more.Topic : Operational Resilience -
ESMA announces intention to publish guidance on algorithmic pre-trade controls under MiFID II
2 July 2025
The European Securities and Markets Authority (ESMA) has published a press release sharing its view that the pre-trade controls that investment firms have implemented warrant further convergence. The EU Markets in Financial Instruments Directive (MiFID II) requires investment firms engaging in algorithmic trading to have effective systems and risk controls to ensure that its trading systems are resilient, have sufficient capacity, are subject to appropriate trading thresholds and limits, and prevent incorrect orders being sent. Those systems must also ensure that the trading systems cannot be used for market abuse or insider trading or other purposes contrary to the EU Market Abuse Regulation. Commission Delegated Regulation (EU) 2017/589 further specifies the pre-trade controls that an investment firm must have in place to meet these MiFID II requirements.
Read more.Topic : MiFID II -
SRB publishes updated guidance on solvent wind-down of trading books
2 July 2025
The Single Resolution Board (SRB) has published updated operational guidance, accompanied by a press release, on the solvent wind-down (SWD) of trading books. The guidance is intended to outline the scope and key expectations for SWD planning and potential execution. Its objectives are to provide a framework to: (i) ensure that banks are adequately prepared and possess the necessary capabilities to plan for a SWD in resolution; and (ii) enable the timely and effective execution of the SWD plan within a reasonable timeframe. This version of the guidance updates and replaces the SRB's original SWD guidance, published in December 2021, which was aimed at facilitating the phase-in of SWD-related expectations. It incorporates feedback from banks and other stakeholders, and addresses the shortcomings identified by the SRB from its review of banks' deliverables. The SRB has also simplified the guidance by removing complexity and enhancing proportionality.Topic : Recovery and Resolution -
EBA consults on draft guidelines on application of definition of default and applying credit conversion factors under CRR
2 July 2025
The European Banking Authority (EBA) has published two consultation papers under the Capital Requirements Regulation (CRR), as amended by the revised Capital Requirements Regulation (CRR III).
The first consultation paper proposes amendments to the guidelines on the application of the definition of default under Article 178 of the CRR.
Key proposals include:- Maintaining the 1% threshold for the net present value loss in debt restructuring, emphasising the framework's flexibility and alignment with accounting principles.
- Considering a shortened probation period for certain forborne exposures from one year to three months—however this is not incorporated in the draft amended guidelines.
Topic : Prudential Regulation -
UK FCA publishes final rules on fees and levies for 2025/26
1 July 2025
The UK Financial Conduct Authority (FCA) has issued final policy statement PS25/8, accompanied by an updated webpage, confirming the regulatory fees and levies for the financial year 2025/26. This follows the FCA's April consultation and sets out the final rates for each fee-block, including those funding the FCA, the Financial Ombudsman Service and other government levies. The fees allow the FCA to recover the costs of delivering its priorities and strategy as outlined in its 2025/26 work programme. The annual funding requirement required for the FCA is GBP783.5 million, which includes the baseline cost of ongoing regulatory activities and exceptional projects. In response to the consultation feedback, the FCA makes minor corrections and clarifications to the final rules, including updates to tariff data definitions and provisions to recover costs associated with skilled person appointments under the Money Laundering Regulations. The final rules are implemented through the Periodic Fees (2025/2026) and Other Fees Instrument 2025. Firms are encouraged to use the FCA's online fees calculator to determine their individual fees based on the published rates. The FCA confirms it will invoice fee payers from July onwards for their 2025/26 periodic fees and levies.Topic : Fees / Levies -
ESMA publishes thematic note on clear, fair and not misleading sustainability-related claims
1 July 2025
The European Securities and Markets Authority (ESMA) has issued a thematic note to assist firms when making sustainability claims to ensure that they are clear, fair and not misleading. The aim of the thematic note is to provide market participants with information and build on observed market practices. The note focuses on environmental, social and governance (ESG) credentials and outlines four guiding principles on making sustainability claims: (i) accurate—sustainability claims should fairly and accurately represent the entity's sustainability profile without exaggeration and avoiding falsehoods, omissions and cherry-picking; (ii) accessible—sustainability claims should be based on information that is easy to access and understand, with the appropriate level of detail and clarity, avoiding oversimplification; (iii) substantiated—sustainability claims should be backed by clear, credible reasoning, facts and processes, with transparent methodologies and limitations; and (iv) up to date—sustainability claims should be up to date with any material changes disclosed promptly, including a clear indication of the analysis' date and perimeter.Topic : Sustainable Finance -
UK House of Lords committee launches call for evidence on growth of private markets
1 July 2025
The House of Lords Financial Services Regulation Committee (the Committee) has launched a call for evidence as part of its inquiry into the growth of private markets in the UK following the regulatory reforms introduced after 2008. The inquiry seeks to examine: (i) whether post-2008 regulatory capital and liquidity reforms have affected banks' capacity or willingness to lend, thereby shifting risk from the regulated banking sector to less transparent private markets; and (ii) the extent of the Bank of England's visibility into the size of these private markets, their links to the banking system and the potential for any spillover risks. The Committee poses ten specific questions and the deadline for responses is 18 September. -
EBA final guidelines on ADC exposures to residential property under CRR
1 July 2025
The European Banking Authority (EBA) has issued its final guidelines, accompanied by a press release, on the treatment of acquisition, development and construction (ADC) exposures to residential property under Article 126a of the Capital Requirements Regulation (CRR). These guidelines mark the first phase of the EBA's roadmap for implementing credit risk provisions under the EU Banking Package. They clarify the conditions under which institutions may apply a reduced risk weight of 100%, instead of the default 150%, to ADC exposures that meet specific credit risk-mitigating criteria. These conditions include: (i) at least 50% of total contracts must be either pre-sale contracts with a cash deposit of at least 10% of the sale price, pre-lease contracts with a cash deposit equal to or exceeding three times the monthly lease rate, or a combination of sale and lease contracts; and (ii) obligor-contributed equity of at least 25% of the property's value upon completion. This threshold was revised down from 35% following the May 2024 consultation. The guidelines also introduce flexibility for public housing projects by reducing the equity requirement to 20% and broadening the scope of eligible equity to include committed subsidies.Topic : Prudential Regulation -
EC adopts Delegated Regulation on RTS for identification of main risk driver of a position under CRR
1 July 2025
The European Commission (EC) has adopted a Delegated Regulation supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards (RTS) specifying methods for identifying the main risk driver of a position and determining whether a transaction represents a long or short position. The proposed general method to identify the main risk driver hinges on sensitivities defined under the market risk standardised approach (FRTB-SA) or on add-ons defined under the standardised approach for counterparty credit risk (SA-CCR). For the determination of the direction of the positions, the methodology is aligned with the one set out in the technical standards developed in accordance with Article 279a(3), point (b), of the CRR. For relatively simple instruments, such as fixed-rate bonds, floating-rate notes, stocks, forwards, futures, simple swaps and plain vanilla options, a simplified method has also been specified. The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union. -
EBA publishes technical advice to EC on fees to validate pro forma models under EMIR
30 June 2025
The European Banking Authority (EBA) has published technical advice to the European Commission, alongside a press release, on a possible Delegated Act concerning fees for the validation of pro forma models under the European Market Infrastructure Regulation (EMIR). EMIR, as amended by EMIR 3, requires that counterparties apply for authorisation to their competent authorities before using, or adopting a change to, a model for initial margin calculation used as a risk-mitigation technique for over-the-counter (OTC) derivative contracts not cleared by a central counterparty (CCP). The EBA is charged with establishing a central validation function for the elements and general aspects of pro forma models, and any changes to those. It must also charge an annual fee, per pro forma model, to counterparties using the pro forma models it validates.
Read more.Topic : Derivatives -
HMT and UK FCA announce new "targeted support" proposals for pensions and retail investments
30 June 2025
The UK Financial Conduct Authority (FCA) has published a consultation paper CP25/17 (CP) accompanied by a press release and updated webpage, proposing a new regulatory framework for "targeted support" in pensions and retail investments. The CP forms part of the Advice Guidance Boundary Review and the FCA's five-year strategy to support growth and help consumers navigate their financial lives. The deadline for comments is 29 August and a policy statement is expected by the end of the year, subject to the volume of feedback received.
The CP proposes the introduction of a new regulated activity of targeted support, which would allow firms to provide ready-made suggestions on investment products or courses of action to groups of consumers with common characteristics, making it clear that such support does not constitute fully personalised financial advice. The UK Government has announced that it will consult on amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 accordingly to introduce the new regulated activity. A draft statutory instrument is expected to be published alongside the Mansion House speech on 15 July. The targeted support framework would not impact the existing regulatory framework for activities that can currently be delivered as guidance without FCA authorisation.
Read more. -
ESMA publishes final report on 2023–2024 CSA on integration of sustainability risks and disclosures
30 June 2025
The European Securities and Markets Authority (ESMA) has published its final report on the 2023-2024 common supervisory action (CSA) carried out with national competent authorities (NCAs)on the integration of sustainability risks and disclosures in the investment management sector. The CSA assessed how NCAs supervise compliance with the Alternative Investment Fund Managers Directive (AIFMD), the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the Sustainable Finance Disclosure Regulation (SFDR). ESMA concludes that while there is a satisfactory level of compliance, significant vulnerabilities remain, including: (i) inconsistent integration of sustainability risks into investment processes; (ii) deficiencies in entity-level and product-level SFDR disclosures; and (iii) ongoing greenwashing risks. The report highlights the need for enhanced supervisory convergence, urging NCAs to maintain proactive engagement with market participants and to follow up on cases where vulnerabilities were identified. NCAs are also encouraged to apply the European Supervisory Authorities' (ESAs) common understanding of greenwashing as a reference point in their ongoing supervision.
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Council of the EU publishes comparison tables on Payment Services Package
30 June 2025
The Council of the EU has published initial four-column tables for the two key legislative proposals under the Payment Services Package: (i) the proposed Payment Services Directive (PSD3); and (ii) the Payment Services Regulation (PSR). The tables present, side-by-side, the positions of the European Commission, the European Parliament and Council of the EU, along with a fourth column left blank for Member State comments. -
UK PRA publishes annual fees for 2025/26
30 June 2025
The UK Prudential Regulation Authority (PRA) has issued final policy statement PS10/25, setting out the annual fees for the 2025/26 financial year, following the consultation in April (CP8/25). The final policy introduces only minor amendments to the draft proposals set out in the consultation. Overall, the total levies and fees have increased by 3% year-on-year. Within this, the Bank of England (BoE) levy has risen by 4%, the PRA levy has decreased by 1% and other levies and fees have increased by 4%. The PRA's Total Funding Requirement for 2025/26 is set at GBP350.2 million, representing a 0.8% decrease compared to the previous year. The Annual Funding Requirement for 2025/26 stands at GBP336.4m, representing a GBP5.1m increase from the 2024/25 figure of GBP331.3m. It is also GBP7.7m higher than the amount proposed in the consultation. This is primarily due to a larger allocation of the BoE's investment portfolio and central support costs to the PRA, partially offset by a reduction in the pensions provision. The policy also confirms the introduction of a Future Banking Data Fee, supporting the PRA's role in the BoE's programme to modernise regulatory data collection. The updated PRA Rulebook, incorporating the PRA Rulebook: PRA Fees Amendment Instrument 2025, entered into force on 2 July.Topic : Fees / Levies -
Corrigendum to EMIR 3 clarifies AML/CFT references
27 June 2025
A Corrigendum to Regulation (EU) 2024/2987, referred to as the revised European Market Infrastructure Regulation (EMIR 3), has been published in the Official Journal of the European Union. This Regulation amends Regulations (EU) No 648/2012 (EMIR), No 575/2013 (Capital Requirements Regulation) and (EU) 2017/1131 (Money Market Fund Regulation) to introduce measures aimed at mitigating excessive exposures to third-country central counterparties. The Corrigendum corrects a legal reference concerning the identification of high-risk third countries for anti-money laundering and counter-terrorist financing purposes. Specifically, it replaces an incorrect reference to Regulation (EU) 2024/1624 with the correct citation to Directive (EU) 2015/849, known as the Anti-Money Laundering Directive. -
FCA publishes final rules on data decommissioning
27 June 2025
The UK Financial Conduct Authority (FCA) has published final policy statement PS25/7, alongside an updated webpage, on data decommissioning. Following the FCA's consultation in April, it has proceeded with:- Removing the requirement for data collection relating to: (i) FSA039—Client money and assets, (ii) Section F of the Retail Mediation Activities Return (RMAR) and (iii) Form G—The Retail Investment Adviser Complaints Notifications Form.
- Simplifying the FCA Handbook to remove guidance about data collections that have already been decommissioned.
- Entirely removing forms that are already included in the Annexes to SUP 16.
Topic : Other Developments -
UK FCA Handbook Notice 131
27 June 2025
The UK Financial Conduct Authority (FCA) has published Handbook Notice 131, outlining updates to the FCA Handbook resulting from the following statutory instruments.- Enforcement Guide (Amendment) Instrument 2025. Revokes the previous Enforcement Guide and introduces a new Enforcement Guide (ENFG). Accompanied by the Enforcement Guide (Consequential Amendments) Instrument 2025, which amends various sections of the FCA Handbook, including the Glossary and introduces a new chapter named SUP 6B. Both instruments entered into force on 3 June.
- Private Intermittent Securities and Capital Exchange System (PISCES) Instrument 2025 and Private Intermittent Securities and Capital Exchange System (PISCES) (Consequential Amendments) Instrument 2025. Establishes the regulatory framework for the PISCES sandbox, a new private market for the intermittent trading of private company shares and introduces the PISCES (PS) sourcebook. Both instruments entered into force on 10 June.
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EBA publishes spring 2025 risk assessment report
27 June 2025
The European Banking Authority (EBA) has published its spring 2025 risk assessment report alongside a press release, outlining key developments and emerging risks within the European Union/European Economic Area (EU/EEA). The report highlights, among other things:- Strong capital and liquidity positions across EU/EEA banks, with profitability remaining at historically high levels, although increased uncertainty and financial market volatility could challenge the sustainability of this.
- Rising credit risks, particularly in sectors vulnerable to geopolitical tensions, tariffs and supply chain disruptions.
- Elevated operational risks, driven by increasing cyber threats and a surge in fraudulent activities.
- Shifts in funding strategies, with banks relying more on deposits and secured debt to support asset growth.
- Exposure to climate-related risks, both transitional and physical, with significant variation across institutions and jurisdictions.
Topic : Prudential Regulation -
ESAs launch joint consultation on draft guidelines for ESG stress testing
27 June 2025
The European Supervisory Authorities (the European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) have launched a joint consultation on their joint draft guidelines for integrating environmental, social and governance (ESG) risks into financial stress tests for banks and insurers. These guidelines, mandated by the Capital Requirements Directive (CRD) and the Solvency II Directive, aim to harmonise how competent authorities across the EU consistently incorporate ESG risks into their supervisory frameworks. They establish a common framework for designing ESG-related stress testing methodologies and standards, ensuring consistency across the financial sector. They allow authorities to either integrate ESG risks into existing stress testing frameworks or conduct complementary assessments under adverse ESG scenarios, depending on the applicable sectoral legislation. Key elements of the draft guidelines include: (i) detailed guidance on the design and features of ESG stress tests; and (ii) organisational and governance requirements, including sufficient human resources with ESG expertise, data collection and management systems and appropriate timelines for scenario analysis. The guidelines are also designed to be forward-looking, allowing for future methodological advancements and improvements in ESG data availability. The deadline for responses is 19 September, with a public hearing scheduled for 26 August. The guidelines are expected to be finalised by the end of the year and published by 10 January 2026. -
EC adopts Delegated Regulation under MiCAR on liquidity management for ARTs and EMTs
27 June 2025
The European Commission has adopted a Delegated Regulation supplementing Regulation (EU) 2023/1114 (Markets in Crypto Assets Regulation) (MiCAR), regarding regulatory technical standards (RTS) specifying the minimum contents of the liquidity management policy and procedures for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs). The RTS aim to ensure that issuers maintain robust liquidity frameworks capable of withstanding both normal and stressed market conditions.
Read more.Topic : FinTech -
ESMA publishes technical advice on scope of CSDR settlement discipline regime
26 June 2025
The European Securities and Markets Authority (ESMA) has published a final report and press release, providing technical advice to the European Commission (EC) on narrowing the scope of the Central Securities Depositories Regulation (CSDR) cash penalties under the CSDR settlement discipline regime. CSDR Refit, which came into force in January 2024, referred to the need for the settlement discipline rules to be more operational and better tailored to diverse market operations and transactions. To this end, ESMA's report provides technical advice to the European Commission on the underlying causes of settlement fails which are considered not to be attributable to participants in the transaction, as well as circumstances which are not considered as trading, and which should therefore not be subject to settlement discipline measures.
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FATF publishes targeted update and guidance on virtual assets and VASPs
26 June 2025
The Financial Action Task Force (FATF) has published its sixth targeted update on the implementation of its standards for virtual assets (VAs) and virtual asset service providers (VASPs), alongside an updated webpage. The report assesses global progress in applying anti-money laundering and counter-terrorist financing (AML/CFT) measures to VAs and VASPs, noting improvements in regulation and enforcement. However, challenges remain and the report sets out key recommendations on: (i) risk assessment and policy approach to VASPs; (ii) licensing/registering and supervising VASPs; (iii) implementation of the Travel Rule; (iv) addressing emerging and increasing risks related to stablecoins and decentralised finance arrangements; and (v) recommendations for the private sector.
In parallel, FATF has also released Best Practices on Travel Rule Supervision, providing more detailed guidance to assist jurisdictions in effectively supervising compliance with the Travel Rule for VASPs. The guidance offers practical examples and supervisory approaches to address common implementation challenges. -
FCA to launch new and improved Handbook website
26 June 2025
The UK Financial Conduct Authority (FCA) has announced its plan to launch a new and improved FCA Handbook website as part of its five-year strategy to enhance regulatory efficiency. The updated website will retain all existing features but will offer improved navigation, facilitate understanding of rule connections and make it easier to compare different versions of Handbook text. A beta version will be available soon, with both the current and new websites accessible during the testing phase. The full rollout is expected later this year, ensuring continuous updates to rules and guidance throughout the transition.Topic : Other Developments -
BoE and PRA publish annual reports
26 June 2025
The Bank of England (BoE) and Prudential Regulation Authority (PRA) have published a series of annual reports, which are set out below.- BoE Annual Report and Accounts. The BoE has set out its strategic investment priorities for 2025–2028, which include: monetary policy transformation, in the context of the Bernanke Review recommendations; modernising the BoE's central banking operations and streamlining data collections; supporting greater innovation in retail and wholesale payments in the UK and internationally; supporting growth in the economy; reviewing the BoE's activities for efficiency and effectiveness; and completing transformation agendas.
Topic : Other Developments -
PRA publishes 2024/2025 secondary competitiveness and growth report
26 June 2025
The UK Prudential Regulation Authority (PRA) has published its 2024/25 competitiveness and growth report, setting out how it has advanced its secondary competitiveness and growth objective (SCGO). The SCGO was introduced under the Financial Services and Markets Act 2023 (FSMA 2023) and requires the PRA to advance the international competitiveness and growth of the UK economy, particularly in financial services. The regulators are required to publish two annual reports, in 2024 and 2025, on SCGO implementation. The PRA also comments on its secondary competition objective (SCO), which requires the PRA to facilitate effective competition in the markets for services provided by PRA-authorised firms. Earlier this month, the House of Lords Financial Services Regulation Committee published a report on the regulators' progress in supporting growth and competitiveness, finding a prevailing culture of risk aversion by the regulators which undermines the objective.
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FCA findings on risk and wind-down planning in payment and e-money firms
26 June 2025
The UK Financial Conduct Authority (FCA) has published the findings of its multi-firm review into risk management and wind-down planning across e-money and payment firms. While the FCA had observed examples of good practice in the structure of firms' wind-down plans (WDPs) and risk management frameworks, it concluded that no firm fully met its expectations and in particular were not adhering to the FCA's finalised guidance. Key areas identified as needing improvement are set out below.
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PSR consults on the revocation of SD4
26 June 2025
The UK Payment Systems Regulator (PSR) has published consultation paper CP25/2 alongside a new webpage, proposing the revocation of Specific Direction 4 (SD4) and its amendment, SD4a. SD4, introduced following the PSR's 2016 infrastructure market review, requires the operator of the LINK payment system to procure its central infrastructure every ten years via a competitive process.
The PSR now considers this requirement may no longer be an effective means of addressing competition concerns, due to evolving market conditions (in particular, decreased cash withdrawals and reduced scheme revenues). Instead, the PSR proposes that active regulatory oversight of LINK and its infrastructure provider, Vocalink, would be a more effective way to mitigate risks associated with a monopoly position. The consultation seeks views on the proposed revocation, particularly the risks the removal may create on competition, innovation and end-user outcomes, and how enhanced supervision of LINK and Vocalink could help address them. The deadline for responses is by 5:00pm on 17 July. -
ESMA publishes technical advice on eligible assets for UCITS
26 June 2025
The European Securities and Markets Authority (ESMA) has published its final technical advice to the European Commission (EC) on the review of the UCITS Eligible Assets Directive (EAD) accompanied by a press release. The EAD clarifies the types of assets in which UCITS funds may invest. ESMA's advice assesses how the EAD has been implemented across jurisdictions and sets out a range of proposals to overcome divergent practices by national regulators and markets. Central to ESMA's recommendations is the adoption of a look-through approach to assess asset eligibility for at least 90% of a UCITS portfolio. ESMA also proposes allowing up to 10% indirect exposures to alternative assets, subject to strict regulatory safeguards. The EC is expected to consider ESMA's advice in its review of the UCITS EAD framework.Topic : Fund Regulation -
ESMA report proposes amendments to DLT pilot regime for permanent adoption
25 June 2025
The European Securities and Markets Authority (ESMA) has published a report, accompanied by a press release, on the functioning and review of the Distributed Ledger Technology (DLT) pilot regime. The DLT pilot regime allows certain DLT market infrastructures to operate with exemptions from some EU financial services legislation. The regime has so far received limited uptake, with only three authorised infrastructures and minimal live trading activity. The report identifies operational and legal challenges, such as interoperability issues and restricted access to central bank money and refers to industry feedback, that the thresholds for financial instruments that may be admitted to trading or recorded on DLT market infrastructures may be too restrictive.
Read more.Topic : FinTech -
FCA publishes discussion paper on the future of the UK mortgage market
25 June 2025
The UK Financial Conduct Authority (FCA) has published discussion paper DP25/2 (DP) accompanied by an updated webpage and press release, on the future of the UK mortgage market, as part of its ongoing mortgage rule review. The DP forms part of the FCA's five-year strategy to rebalance risk, support growth and help consumers navigate their financial lives. It outlines potential reforms to improve access to sustainable home ownership, support responsible lending and encourage market innovation.
Read more.Topic : Consumer / Retail -
EU legislative bodies reach political agreement on CMDI framework
25 June 2025
The Council of the EU and the European Parliament have announced they have reached a political agreement on the legislative package to reform the crisis management and deposit insurance framework for banks in the EU. The package includes targeted amendments to the Bank Recovery and Resolution Directive, the Single Resolution Mechanism Regulation and the Deposit Guarantee Schemes Directive. The reform aims to strengthen the EU's ability to manage bank failures, including small and medium-sized banks, by facilitating access to industry-funded safety nets, such as national resolution funds and the Single Resolution Fund. These tools are intended to supplement a failing bank's own loss-absorbing capacity, thereby reducing reliance on taxpayer-funded bailouts, referred to as the "bridge the gap" mechanism.
Read more.Topic : Recovery and Resolution -
UK Government consults on measures to support UK sustainable finance
25 June 2025
The UK Government's Department for Energy Security & Net Zero has published a series of three consultations on proposals to help UK-regulated financial institutions and large companies to develop climate transition plans. The first consultation seeks views on proposals to implement climate-related transition plan requirements, including mandating that entities develop and disclose transition plans or explain why they have not disclosed a plan and making it a legal requirement to take steps in line with a transition plan. The consultation also considers the scope of companies that should be captured (with a focus on ensuring the requirements are proportionate and concentrate on economically significant entities).
Read more.Topic : Sustainable Finance -
Regulation amending CRR in relation to SFT stable funding factors published in OJ
25 June 2025
Regulation (EU) 2025/1215 of the European Parliament and of the Council of EU of 17 June amending the Capital Requirements Regulation (CRR) in relation to the stable funding factors for securities financing transactions (SFTs) and unsecured transactions with a residual maturity of less than six months, was published in the Official Journal of the European Union. The factors are used to apply the net stable funding requirements under the CRR and, by virtue of article 510(8) of CRR, were due to be increased unless otherwise specified in a legislative act adopted on the basis of a European Commission proposal. However, the current position is instead being maintained to ensure the ongoing efficient functioning of SFTs and collateral markets and to avoid an undue increase in funding costs for credit institutions. The Regulation enters into force on 26 June and applies from 29 June. Under the revised framework, the European Banking Authority will assess and report on the impact of these changes every five years.Topic : Prudential Regulation -
ESMA consults on draft RTS for margin transparency requirements and clearing costs
24 June 2025
The European Securities and Markets Authority (ESMA) has published two consultation papers (CP) proposing draft regulatory technical standards (RTS) mandated under the review of European Market Infrastructure Regulation (EMIR 3).- Draft RTS on EMIR 3 margin transparency requirements (under article 38 EMIR), regarding the information to be provided by central counterparties (CCPs) on their margin simulation tools and by clearing service providers (CSPs) on their margin simulation requirements; and by both on their margin models. The aim is to improve transparency for clearing participants and enable them to better predict margin calls.
- Draft RTS on clearing fees and associated costs (under article 7c(4) EMIR), specifying further details of the information to be disclosed by CSPs regarding clearing fees and associated costs, with the aim of increasing costs transparency.
The deadline for responses is 8 September. ESMA will submit the final draft technical standards to the European Commission by 25 December. -
PRA consults on proposed reforms to credit union investment rules
24 June 2025
The Prudential Regulation Authority (PRA) has published consultation paper CP13/25 proposing amendments to the credit union investment rules to permit investments in credit union service organisations (CUSOs). The proposals would result in changes to the credit unions part of the PRA Rulebook and to supervisory statement (SS) 2/23.
The key proposals are:- To amend the PRA Rulebook to clarify that credit unions are permitted to invest in CUSOs.
- To introduce a new chapter in SS2/23 to outline the PRA's expectations for credit unions investing in or using CUSOs to manage associated prudential risks.
- To make consequential amendments to chapter 17 of SS2/23 following the PRA's proposed deletion of SS20/15 (on supervising building societies treasury and lending activities).
Topic : Prudential Regulation -
UK regulators publish updated MoU on payment systems
24 June 2025
The UK Financial Conduct Authority (FCA), Bank of England, Payment Systems Regulator (PSR) and Prudential Regulation Authority have issued a joint statement announcing their revised memorandum of understanding (MoU) on the supervision of payment systems in the UK.
The update follows a review conducted by the authorities in December 2024 which identified opportunities to enhance cooperation among the authorities in overseeing payment systems. The revised MoU aims to clarify the respective roles and coordination mechanisms of the authorities and introduces principles for regulatory cooperation including through regular engagements to share insights on the sector, delivering joint policy initiatives and coordinating supervisory work. The revised MoU reflects the PSR's current responsibilities, notwithstanding the UK government's announcement that the PSR's functions will largely be rolled into the FCA in the future, with no immediate changes being made by the UK Government to the PSR's remit or ongoing work programme. -
UK Government publishes 10-year industrial strategy plan
23 June 2025
The UK Government has published a policy paper outlining its industrial strategy. The strategy centres around eight priority sectors (the IS-8), including financial services. The UK government's ambition is to establish the UK as the world's most innovative full-service financial centre by 2035. A dedicated sector plan is expected to be published alongside the mansion house speech on 15 July.
Key measures to achieve this objective include:- Ensuring financial services enables growth across the real economy, with retail banks and wholesale markets providing credit and liquidity.
- Mobilising pensions capital into the UK.
Read more. -
Council of EU adopts negotiating position on omnibus sustainability package
23 June 2025
The Council of the EU has announced it has adopted its negotiating mandate on the Omnibus I package which proposes targeted amendments to, amongst other things, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The EU has already published Directive (EU) 2025/794 which implemented the "stop-the-clock" proposal, postponing the application date of aspects of CSRD and CS3D.
Read more.Topic : Sustainable Finance