The UK Financial Conduct Authority (FCA) has published the findings from its review of financial crime systems and controls across asset management and alternative firms. In 2025/26, the FCA engaged with 242 asset management and alternatives firms to gather firms' own assessments of the financial crime risks they face and to understand their control frameworks. The FCA has summarised its main findings, including examples of good and poor practice. It also reminds firms of the FCA's expectations. The FCA's findings centre on how well firms: (i) understand their inherent financial crime risk; and (ii) identify, mitigate and manage financial crime risk (control risks). The review covered a range of business models, and the FCA notes that not all findings will be applicable to all firms given the diversity of the sector. The review is part of the FCA's wider financial crime supervisory work in support of its 2025–30 strategy and supervisory priorities for the sector.

The FCA found that:

• Inherent risks—some firms were exposed to heightened financial crime risks, especially those firms active in private markets, due to factors such as complex ownership structures, higher-risk customers and international fund flows. The FCA expects firms that face higher financial crime risks to have established frameworks and appropriate controls to mitigate these risks, as referenced in the Money Laundering Regulations 2017 (MLRs) and Senior Management Arrangements, Systems and Controls (SYSC) section of the FCA's Handbook.
• Control risks—most firms showed they understood legal and regulatory requirements through their control framework, but others appeared to underestimate their inherent financial crime risks, resulting in an informal approach to evaluating and managing them. The FCA sets out examples of good and bad practice relating to business-wide risk assessments, customer risk assessments, customer due diligence and enhanced due diligence, ongoing monitoring, screening, governance and training. In some instances, the FCA states that the findings were concerning and will require firms to review their financial crime frameworks to ensure they are adequately identifying, managing and mitigating the risks to which they are exposed.

The FCA encourages firms to consider its findings in the context of their own business model and activities and continue to address any gaps in their financial crime control frameworks. The FCA will continue to monitor firms through its supervisory work to make sure they are considering the points raised in this review to drive improvements.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/26, amongst a package of consultations on modernising the UK asset management regulatory framework. The consultation is to be read alongside HM Treasury's proposed reforms to the legislative framework for the UK alternative investment fund manager (AIFM) regime.

The FCA states that currently, different reporting requirements across a range of fund types produce inconsistent data that is difficult to use and interpret, and a burden for firms to report. This consultation proposes a new framework, Fund Reporting for Asset Management Entities (FRAME), which would replace existing requirements with a single, risk-based regime. The proposals are intended to simplify and align reporting obligations more closely with the size, type and risk profile of the fund. The FCA also proposes new reporting requirements on fund holdings in relation to certain UK authorised funds and a new streamlined annual reporting requirement for certain Markets in Financial Instruments Directive (MiFID) investment firms and operators of collective investment schemes that do not currently report to the FCA. This is to address gaps in the data it receives on wider asset management activity.

The FCA published three reporting templates showing the data it proposes to collect from managers and operators of different fund types, on a new webpage, together with a test online version. The FCA proposes to move certain submission processes online and is seeking feedback on this by 31 August. The deadline for comments on the rest of the consultation is 22 September. Final rules are expected in the first half of 2027 and the FCA will confirm the implementation date of FRAME in due course. Its aim is to fully implement the new regime in 2028, but it may explore whether some aspects of reporting could be introduced earlier, depending on firm readiness.

HM Treasury (HMT) has published a draft statutory instrument (SI), the Alternative Investment Fund Managers Regulations 2026, and accompanying policy note, setting out proposals to reform the UK regulatory framework for alternative investment fund managers (AIFMs) using powers from the Financial Services and Markets Act 2023 (FSMA 2023). The draft SI repeals and replaces key assimilated legislation governing AIFMs, transferring most firm-facing requirements from legislation to UK Financial Conduct Authority (FCA) rules. The FCA's consultation paper was published alongside the publication of the draft SI.

The assimilated law being replaced by this instrument includes: (i) the Alternative Investment Fund Managers Regulations 2013; (ii) Commission Delegated Regulation (EU) No 231/2013; (iii) Commission Delegated Regulation (EU) No 694/2014; and (iv) Commission Delegated Regulation (EU) No 447/2013.

The proposals include clarifying the definition of an AIF, removing existing legislative size thresholds for AIFMs, reforming the registration regime for smaller firms, exempting certain small, internally managed investment companies, maintaining the National Private Placement Regime (for overseas AIFMs and AIFs) while giving the FCA greater flexibility over reporting requirements for domestic and overseas funds in the UK, simplifying private equity disclosure obligations, and other minor changes to rationalise the regime with how the market functions. On remuneration, the current legislation, which sets out prescriptive remuneration requirements for AIFMs (and some MiFID firms), will be removed and the FCA will be given powers in the new legislation to institute a replacement remuneration regime for solo-regulated firms.

The deadline for technical feedback on the draft SI is 14 October. HMT will consider feedback and set out a timeline for laying the final SI, which it expects in early 2027, subject to parliamentary time. The legislation will commence at the same time as the FCA makes new rules.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/27, amongst a package of consultations on modernising the UK asset management regulatory framework. The consultation is to be read alongside HM Treasury's proposed reforms to the legislative framework for the UK alternative investment fund manager (AIFM) regime.

In this consultation, the FCA proposes a significant overhaul of the remuneration regime for solo-regulated firms. The FCA proposes replacing the existing remuneration codes for AIFMs, Undertakings for Collective Investment in Transferable Securities (UCITS) management companies and MiFID Prudential Sourcebook (MIFIDPRU) investment firms with a single, consolidated remuneration code (SYSC 19AA). The proposals would move away from detailed, prescriptive requirements towards a more outcomes-focused and proportionate framework, placing greater reliance on firms' governance arrangements and management body oversight.

In addition, the FCA proposes to simplify and update definitions and terminology to reflect the new code and the removal of the existing ones, make consequential amendments across the Handbook (including to the glossary, Senior Management Arrangements, Systems and Controls and other relevant sourcebooks), and set out transitional and sequencing arrangements, including how the new code would apply alongside forthcoming changes to the AIFM framework, so that firms are clear about how and when requirements would take effect. The FCA also proposes to revoke existing non-Handbook guidance where no longer relevant and incorporate elements into the new code.

The deadline for comments is 16 September. The final rules are expected to apply the day after the final policy statement is published in Q1 2027. The new code would apply from that date to remuneration relating to performance periods beginning on or after the commencement date. For AIFMs, and to align with the wider AIFM reform, part of which includes changes to the definitions and thresholds used to categorise AIFM firms, the new code would apply in two stages—initially to full scope UK AIFMs from the commencement date in Q1 2027, and subsequently to medium and large UK AIFMs once the AIFM reforms take effect.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/28, amongst a package of consultations on modernising the UK asset management regulatory framework. The consultation should be read alongside HM Treasury's (HMT) proposed reforms to the legislative framework for alternative investment fund managers (AIFMs), set out in a policy note and the draft statutory instrument (SI) published for technical comment.

Most firm-facing requirements inherited from the EU framework will move from legislation and be transferred to the FCA's rulebook. The FCA's consultation sets out the rules and changes it proposes to introduce in the following areas:

• A new three-tier regime for AIFMs, with requirements calibrated by firm size using net asset value thresholds of GBP750 million and GBP5 billion, replacing the current legislative thresholds.
• Simplification of the regime by removing or reducing detailed, prescriptive requirements inherited from the Alternative Investment Fund Managers Directive, producing a more proportionate framework.
• A clarified scope of regulation and authorisation.
• A new FCA sourcebook titled the "Alternative Investment Funds sourcebook" for managers of unauthorised funds.
• Changes to valuation, leverage, risk management, liquidity management, delegation, investor disclosure and cross-border marketing requirements.

The consultation also includes discussion chapters on depositaries, prime brokers, the business restriction and the prudential regime for AIFMs. Feedback on the discussion chapters is due by 18 September, while feedback on all other consultation proposals, together with the discussion chapter on the prudential regime, is due by 14 October. The FCA intends to publish a policy statement in 2027 and will implement its rules in 2028.

The Bank of England's (BoE) Financial Policy Committee (FPC) has published its July financial stability report alongside the record of its 26 June meeting. The FPC meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.

Key topics covered include:

• Markets: Vulnerabilities in risky asset valuations, sovereign debt markets and risky credit markets, including private credit, remain and some have become more pronounced since the December 2025 financial stability report. Notably, there has been a substantial increase in the use of leverage in equity markets.
• AI-related risks: The FPC examined the macro financial risks arising from the AI transition across a range of sectors. It also notes that recent rapid advances in frontier AI capabilities have increased financial stability risks related to cyber and operational resilience.
• Countercyclical capital buffer (CCyB): The FPC maintained the UK CCyB rate at its neutral setting of 2%.
• Private markets: The FPC welcomed the BoE's publication of the stress scenario for the private markets system wide explanatory scenario (SWES). The FPC expects to use the SWES to improve its understanding of how banks and non-banks active in private markets would respond to a severe but plausible global downturn.
• Bank capital reform: Following its review of bank capital requirements, the FPC announced that it will work with the UK Prudential Regulation Authority (PRA) to modernise the capital framework. The proposed reforms aim to improve the usability of capital buffers and make leverage ratio requirements more proportionate and effective while maintaining overall financial system resilience. 
• Stablecoins and money market funds (MMFs): The FPC welcomed the BoE's policy statement and consultation on the draft code of practice for systemic sterling-denominated stablecoins and recent statements by HM Treasury and the UK Financial Conduct Authority on their plans to strengthen the resilience of MMFs.

The European Securities and Markets Authority (ESMA) has announced the launch of a common supervisory action (CSA), in collaboration with national competent authorities (NCAs), on the risk management function of undertakings for collective investment in transferable securities (UCITS) management companies and alternative investment fund managers (AIFMs) across the EU. The CSA, which will run throughout 2026 and 2027, will examine firms' compliance with key risk-related provisions under the UCITS and AIFM Directive frameworks, with a particular focus on the effectiveness, independence and expertise of the risk management function.

As part of this exercise, NCAs will focus on three key areas: (i) governance and organisation of the risk management function; (ii) identification, measurement and monitoring of risks; and (iii) reporting to senior management and governing bodies. ESMA intends to publish a final report with the findings of the CSA in 2028.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/21 proposing targeted amendments to the UK Listing Rules (UKLR) for closed-ended investment funds (investment trusts). The consultation follows the FCA's targeted review of how the UKLRs applied to investment entities, which was announced in March as part of the FCA's ongoing work on the UKLR. During the review, the FCA considered how its rules support strong shareholder rights and effective management of conflicts of interest in a range of potential scenarios. The FCA carried out stress testing the rules' operation in different hypothetical situations to ensure they remain robust over time and as markets evolve.

The FCA proposes to:

• Strengthen board independence by introducing a rule to clarify governance requirements when appointing a new investment manager, including requiring directors who are not independent of the proposed investment manager to be excluded from the board's consideration of the transaction or arrangement for the appointment.
• Amend the FCA Handbook Glossary definition of "associate" for its application in the UKLR requirements applicable to closed-ended investment funds under UKLR 11 only, so that it: (i) applies to a proposed investment manager; and (ii) includes the association between a director and any substantial shareholder (or associate of that shareholder) that has proposed the director for their appointment.

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The UK Financial Conduct Authority (FCA) has published Handbook Notice No. 142 which covers changes on which the FCA consulted on (among other proposals) in its quarterly consultation paper No. 51 and its consultation CP25/37 on targeted clarifications of Handbook materials.

The notice confirms the implementation of changes included in quarterly consultation paper No. 51 in relation to:

• The UK equity transparency regime, which moved provisions from UK RTS 1 to MAR 11A.
• The UK market abuse regime, where clarification has been made by introducing new provisions in MAR 1A.2 confirming where breaches of MAR do not give rise to a private right of action under section 138D of the Financial Services and Markets Act 2000.
• The UK authorised fund regime, with changes to the COLL rules in line with amendments to the revised 2025 statement of recommended practice for authorised funds.

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The UK Financial Conduct Authority (FCA) has published a statement with an update on reforming the UK Money Market Fund Regulation (MMFR), following the government's announcement to repeal and replace the existing regime. Following its 2023 consultation and further market engagement, the FCA confirms that requirements will largely move into FCA rules and guidance, while also introducing a new resilience requirement requiring all MMFs to hold sufficient liquidity to withstand market stress.

The FCA will retain current minimum weekly liquid asset (WLA) requirements. However, it expects stable net asset value (NAV) MMFs to hold at least 40% WLA and variable NAV MMFs at least 20% to meet the new resilience requirement. Being lower than these levels temporarily should only occur to meet redemptions or in exceptional circumstances for reasons beyond the manager's control. Daily liquid asset requirements will remain unchanged, and no additional guidance is proposed. The FCA also intends to proceed with other reforms consulted on, including removing links between liquidity thresholds ("delinking") and introducing enhanced "know your customer" requirements to strengthen investor protection.

The government expects legislation to repeal the MMFR to be introduced by the end of the year, with the FCA aiming to align its new rules to this timetable. Interim final guidance on WLA levels will be published, and a policy statement with further detail will follow.

The International Organization of Securities Commissions (IOSCO) has published its final report on valuing collective investment schemes (CIS), following the November 2025 consultation. The report updates and consolidates IOSCO's earlier principles on the valuation of CIS (2013) and the valuation of hedge fund portfolios (2007) into a single set of recommendations to enhance the reliability, consistency and transparency of fund valuation practices across jurisdictions. Specifically, the report reflects feedback from market participants, recent market developments including the increased exposure to illiquid and private assets and heightened retail participation, and periods of market stress and volatility.

The recommendations focus on: (i) governance and oversight arrangements (including under stressed market conditions); (ii) management of conflicts of interest; (iii) the application of sound and consistently applied valuation methodologies; (iv) appropriate use and oversight of third party valuation providers, and (v) transparency, disclosure and record keeping. These are set out in more detail in chapter 3 of the report. IOSCO states the recommendations are intended to be proportionate and adaptable across jurisdictions while promoting a more harmonised and globally consistent valuation framework.

The European Securities and Markets Authority (ESMA) has published its annual report on the quality and use of data in 2025. This sixth edition expands the scope of coverage to include prospectus reporting, credit rating agency reporting, central counterparty supervisory reporting, crowdfunding reporting, major ICT-related incident reporting under the Digital Operational Resilience Act (DORA), reference data under the Markets in Financial Instruments Regulation (MiFIR) and ESMA registers.

The report shows continued progress in improving the quality, usability and supervisory application of regulatory data across EU financial markets. However, the report also highlights differing levels of maturity across datasets. Reporting under the European Market Infrastructure Regulation (EMIR) reached a steady state, with stable reporting rules and reconciliation requirements during 2025. MiFIR transaction reporting showed similar progress, with targeted data quality measures supporting more systematic supervisory use. As a result, transparency indicators are now calculated using MiFIR transaction data. Other regimes, notably the Securities Financing Transactions Regulation (SFTR) and the Alternative Investment Fund Managers Directive (AIFMD) also showed positive developments but require further improvements in data quality and usability. For less mature datasets, the report presents first indicative measures of quality and use.

Looking ahead, ESMA, together with national competent authorities, will continue to further support sustained improvements in the quality of regulatory data with next steps set out in Chapter 5 of the report.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/16, proposing amendments to the regime governing the registration of authorised fund assets. A key driver of the consultation is enabling access to private market investments for funds. Currently, the regulatory rules restrict depositaries' ability to delegate certain registration and safekeeping functions in relation to certain types of private market assets. This means that depositaries (or their controlled nominees) are required to hold legal title to certain types of assets, which may expose them to legal, reputational and financial risk. Consequently, authorised alternative investment funds may be limited as to their ability to invest in such assets where depositaries are unwilling to take on these risks. This set of proposals relates to AIFs rather than UK undertakings for collective investment in transferable securities (UCITS), as UCITS funds are not impacted in the same way as AIFs.

The FCA proposes to ease these restrictions in relation to the registration function, so that depositaries are able to delegate the functions subject to certain conditions. Specifically, the FCA is proposing to allow depositaries of authorised AIFs managed by full-scope AIFMs to delegate certain registration and safekeeping functions for private market assets. For assets which are not safe custody investments or AIF custodial assets, the ability to delegate is limited to affiliates of the authorised fund manager. For assets which are safe custody investments but not AIF custodial assets, depositaries would be able to delegate to a regulated third party. Regarding UCITS, the consultation proposes a new rule that a UCITS depositary must not delegate any function to the authorised fund manager.

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The UK Financial Services Regulatory Initiatives Forum has published the tenth edition of the Regulatory Initiatives Grid, setting out the ongoing and upcoming initiatives impacting the UK financial services sector. The Grid provides an overview of the current state of play as opposed to launching new initiatives, and is also used to communicate timing updates on deliverables where relevant. The grid includes a multi-sector section which covers cross-cutting and omnibus topics such as sustainable finance and operational and financial resilience. There are further sector specific sections including in relation to: banking, credit and lending; payment services and cryptoassets; investment management; retail investment; and wholesale financial markets.

The grid includes a number of UK developments in relation to other items in this week's update, including those mentioned in the King's speech, and the prospective changes in the Financial Services and Markets Bill. Further information is detailed in those specific items covered this week. Separate press releases announcing the Grid have also been published by the UK Financial Conduct Authority and the Bank of England.

Readers are also invited to provide feedback on the Grid and its usefulness in enabling planning for regulatory initiatives and any suggested improvements.

The UK government and UK Financial Conduct Authority (FCA) have published a policy paper announcing plans to reform the UK Money Market Fund Regulation (MMFR) regime, aimed at strengthening money market funds (MMFs) to better withstand periods of market disruption. The reforms are intended to replace the existing regime with a new framework under which most requirements for UK MMFs will be set out in FCA rules and guidance, including expectations for higher levels of liquidity. The government confirms it will introduce legislation when parliamentary time allows, with the new regime expected to be in place by Q4 (subject to parliamentary approval). The FCA is expected to issue a statement shortly with further details on its plans. The government also acknowledges the cross-border nature of MMFs, welcoming ongoing engagement with the EU and the European Commission's report published on 11 May. The government intends to extend the temporary marketing permissions regime, pending a longer-term solution on market access, in line with the UK's framework and process for recognition of overseas firms and funds.

The European Securities and Markets Authority (ESMA) has published a final report with the results of its 2025 common supervisory action (CSA) on the compliance and internal audit functions of fund managers, conducted with national competent authorities (NCAs) across the EU and EEA. The review found that most fund managers broadly comply with key requirements under the Alternative Investment Fund Managers Directive (AIFMD) and Undertakings for Collective Investment in Transferable Securities (UCITS) frameworks; however, it identified weaknesses in governance, particularly regarding the independence of control functions, the quality and implementation of internal policies, and the effectiveness of senior management and board oversight. ESMA also noted significant variation in the quality and practical application of policies across firms, often linked to their size and complexity. The annex to the report contains examples of both good and poor practices. While the overall outcome was positive, ESMA encourages NCAs to follow up on identified breaches and vulnerabilities and to ensure timely remedial action, alongside continued supervisory engagement.

The European Commission (EC) has published a report assessing the adequacy of Regulation (EU) 2017/1131 on money market funds (MMFs), alongside new guidance in the form of FAQs. The EC's first 2023 MMF report concluded that the framework, in force since 2018, operates effectively in reducing liquidity risks, while identifying certain aspects relating to liquidity risk requiring further assessment. Building on this, the latest report finds that MMFs generally adopt a cautious approach, maintaining liquidity buffers above the regulatory minimum and demonstrating an ability to replenish them, including during periods of market stress. The report also includes analysis relevant to market resilience levels in the MMF sector, intended to serve as benchmarks to support supervisors in identifying situations that may warrant closer monitoring. The accompanying FAQs clarify expectations regarding minimum liquidity levels and the use of liquidity buffers, particularly in periods of market stress and heightened redemption requests.

The European Securities and Markets Authority (ESMA) has launched a consultation on a new approach to updating the parameters for stress test scenarios under the Money Market Funds (MMF) Regulation. Under the MMF Regulation, ESMA is required to develop guidelines establishing common reference parameters of the stress test scenarios to be included in the stress tests that MMFs or managers of MMFs are required to conduct and update these guidelines annually based on the input provided by the European Systemic Risk Board (ESRB).

ESMA proposes to replace the annual update of the parameters included in the guidelines (section 5 of the guidelines that includes the calibrations) with an annual update of a dedicated page on the ESMA website where the parameters would be made available. This approach is intended to streamline the update of the parameters, improve accessibility for MMF managers across the EU, and provide greater flexibility in terms of timing, as the new parameters would be immediately available and applicable without waiting for the translations of the guidelines to be finalised. The guidelines would continue to set out the framework and methodology for MMF stress testing, while the ESMA webpage would exclusively be used to publish the updated annual calibration of the parameters. From a supervisory perspective, the change would allow market participants to use the new set of parameters closer to the publication of the related ESRB scenario and reduce the risk of discrepancies. The change is also intended to reduce burden and simplify the process for ESMA and national competent authorities, in line with ESMA's simplification and burden reduction initiative.

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The UK Parliament has published an updated webpage confirming that the Listed Investment Companies (Classification etc) Bill, a Private Members' Bill introduced in September 2024, will make no further progress as the 2024-2026 session of Parliament has come to an end. The Bill made provision about listed investment companies; the classification and characteristics of those companies; and for connected purposes. It related to collective investment undertakings of the closed-end type, the shares of which are admitted to trading on any market or venue operated by a UK recognised investment exchange, known as Listed Closed-End Investment Companies and did not relate to collective investment undertakings other than the closed-end type.

The European Securities and Markets Authority (ESMA) has published its final report on the integrated collection of funds' data, as part of its broader simplification and burden reduction agenda for EU reporting frameworks and due to legislative changes introduced by the Directive amending the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive (AIFMD II). ESMA proposes moving away from fragmented national reporting requirements towards a common EU reporting framework based on a single reporting template, designed to be proportionate to different fund sizes and investment strategies, with the aim of reducing duplication and improving data consistency. This would operate under a hybrid operational model, with data collected at national level but with data validation, storage and analytics being organised at EU level. The EU-level centralised data hub would facilitate data sharing between authorities and limit duplicative data requests.

ESMA will take forward the conclusions of the report in the context of its forthcoming work on the regulatory and implementing technical standards under AIFMD II. It will publish a consultation paper later this year, with the aim of finalising the technical standards by April 2027. After that, the implementation of the new template and the remaining recommendations will be phased in, with the first phase integrating reporting under AIFMD II, and the second phase expanding the integrated framework to other reporting obligations. The go-live of reporting is expected in H1 2029 at the earliest.

The European Parliament's (EP) Committee on Economic and Monetary Affairs (ECON) has published a draft report (dated 28 April) on the European Commission's proposal for a Regulation amending the Sustainable Finance Disclosure Regulation (EU) 2019/2088 (SFDR), Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) and repealing Commission Delegated Regulation (EU) 2022/1288. The proposal, known as SFDR 2.0, was adopted in November 2025. The report contains a draft EP legislative resolution which sets out amendments to the proposed Regulation. For more background on SFDR 2.0, particularly its impact on funds and asset managers, you may wish to read our article "SFDR 2.0 overhaul: impact of the new categories and disclosures on funds and asset managers".

The FCA published has final policy statement PS26/7, setting out its final rules and guidance to support the adoption of tokenisation of authorised funds as part of its wider digital assets and growth agenda. Following feedback to the October 2025 consultation, the FCA finalised Handbook guidance confirming that authorised fund managers may use distributed ledger technology (DLT) to operate unitholder registers, with on-chain records capable of constituting the primary books and records of unit dealings. Firms are not required to maintain a full off‑chain duplicate of those records, provided they have appropriate resiliency arrangements in place. The guidance applies to the use of both private and public DLT networks. Additional guidance is also set out on rules on share classes, where units within a class are recorded on multiple blockchains.

In addition, the FCA introduces an optional direct‑to‑fund dealing model for authorised funds, allowing investors to deal directly with the fund itself, rather than with the authorised fund manager as principal. This aims to simplify fund operations and support faster, more automated settlement, regardless of whether the fund is a traditional or tokenised structure. Following feedback, the FCA decided not to proceed with its proposal to require use of client money accounts for unattributable cash in connection with direct dealing, instead introducing enhanced reconciliation requirements for umbrella‑level cash accounts. The new rules and guidance apply immediately upon publication, with further work on fund tokenisation expected later this year.

The UK Financial Conduct Authority (FCA) has published findings from authorisation applications received from firms seeking to operate in the asset management sector, setting out examples of good and poor practice for firms.

Key findings include:

• Office location: The FCA expects day-to-day management decisions to be taken in the UK. The FCA noted concerns where key decision makers were unable to do so without overseas approval, or were managed by offshore senior managers.
• Outsourcing: Firms are expected to show accountability for compliance with relevant rules when outsourcing activities to third parties. Some firms demonstrated this using service level agreements to oversee and monitor activities.
• Business models: Firms are expected to assess the full risk of their activities to consumers, including compliance with the consumer duty when dealing with retail clients. Some firms failed evidence this, with some business models posing an unacceptably high level of risk, particularly to retail clients.
• Conflicts of interest: There were mixed findings around firms' ability to demonstrate conflicts identification and management through maintaining registers and documenting reviews.

Read more.

The UK Financial Conduct Authority (FCA) has published Handbook Notice No. 139, outlining amendments to the FCA Handbook resulting from the following statutory instruments:

• Redress Reforms Instrument 2026, which partially entered into force on 17 March with the remaining provisions coming into force on 1 June. This clarifies when firms should report emerging issues to the FCA and to improve the operational efficiency of the UK Financial Ombudsman and the Financial Services Compensation Scheme by streamlining processes and reducing the operational costs ultimately met by levy-paying firms.
• Notification of Third Party Arrangements and Operational Incident Reporting Instrument which comes into force on 18 March 2027. This makes changes to the Handbook to enhance incident and third party risk management, strengthen firms' operational resilience and minimise harm.

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The European Securities and Markets Authority (ESMA) has published the official translations of its guidelines on stress test scenarios under the Regulation on Money Market Funds (MMF Regulation). The guidelines apply to competent authorities, MMFs and managers of MMFs as defined in the MMF Regulation. They apply in relation to Article 28 of the MMF Regulation and establish common reference parameters for the stress test scenarios to be included in the stress tests conducted by MMFs or managers of MMFs in accordance with that Article. The guidelines apply from 26 May with respect to parts in red, and the other parts of the guidelines already apply from the dates specified in Articles 44 and 47 of the MMF Regulation.

The UK Financial Conduct Authority (FCA) has published its annual work programme for 2026/27 setting out its planned activity for the second year of its five-year strategy. The programme is structured around the following four strategic priorities:

• Being a smarter regulator: to improve regulatory efficiency and proportionality, the FCA will continue to invest in digital, data and AI capabilities, reduce administrative burdens by simplifying rules and streamlining data returns (including removing three regular returns in April), and improve the authorisation process by further reducing authorisation timelines and continuing to report against new, shorter voluntary targets. In a press release published on the same day, the FCA announced it is developing a new internal AI-enabled authorisation tool, integrated into its existing systems. The FCA will also use generative AI to review documents received from firms, which, following successful testing, it will begin rolling out more widely across authorisations and supervision.

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The UK Financial Conduct Authority (FCA) has published its regulatory priorities reports for the wholesale markets and wholesale buy side sectors. These reports replace the FCA's previous portfolio letters and aim to provide a clearer and more consistent articulation of regulatory expectations.

The FCA's priorities for the wholesale markets sector for this year are to:

• Improve the resilience of firms and markets; given the elevated risk environment, the FCA expects firms to raise standards of operational resilience and third-party and technology risk oversight, ensure trading controls are robust, and bolster liquidity management and financial resilience.
• Enhance efficient, competitive and innovative markets; the FCA expects firms to engage with its market reforms and transparency initiatives and prepare for modernised trading and post-trade infrastructure, including T+1 settlement and digitalisation of market processes.

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The UK Financial Conduct Authority (FCA) has published its quarterly consultation paper No. 51, inviting feedback on proposed amendments to its Handbook. Significantly, it included a proposal to increase the clearing threshold for commodity derivatives under the UK version of the European Market Infrastructure Regulation (UK EMIR) to EUR5 billion, to ensure the threshold remains appropriate in light of higher commodity prices.

Other changes include:

• Consequential changes to the client assets sourcebook to ensure its effective application to regulated cryptoasset activities.
• Rehousing some provisions in Article 17 of the UK version of Commission Delegated Regulation (EU) 2017/587 (RTS 1) into the framework now provided by MAR 11A and tidying up provisions relating to private rights of action.
• Making targeted changes to the collective investment scheme sourcebook to reflect amendments in the 2025 Statement of Recommended Practice for authorised funds.

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The European Commission has published two Delegated Regulations in the Official Journal of the European Union (OJ): (i) Delegated Regulation (EU 2026/465), supplementing the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (AIFMD); and (ii) Delegated Regulation (EU 2026/466) supplementing the Undertakings for Collective Investment in Transferable Securities Directive (Directive 2009/65/EC) (UCITS Directive). These Delegated Regulations lay down regulatory technical standards (RTS) specifying the characteristics of liquidity management tools (LMTs), following the recent amendments made to the AIFMD and the UCITS Directive by Directive (EU) 2024/927 (AIFMD II).

The RTS specify the characteristics of the LMTs set out in the Annexes to the Directives, including suspension of subscriptions, repurchases and redemptions, redemption gates, extension of notice periods, redemption fees, swing pricing, dual pricing, anti-dilution levy, redemption in kind and side pockets. Under the amended Directives, managers must select at least two LMTs from the harmonised list for potential use, taking into account the fund's investment strategy, liquidity profile and redemption policy. The Delegated Regulations were first adopted on 17 November 2025, which we covered separately here. They both enter into force on 19 March, being the 20th day following publication in the Official Journal of the European Union, and will apply from 16 April.

The UK Financial Conduct Authority (FCA) has published Handbook Notice No 137, confirming that it is delaying changes to the Collective Investment Schemes Sourcebook (COLL), and specifically to the concentration rule (COLL 5.2.29R). The concentration rule governs the ability of UK undertakings for the collective investment in transferable securities funds to invest in other collective investment schemes. The FCA previously made changes, which came into force on 31 January 2025, which seek to clarify the level at which the restrictions apply (including for sub-funds of umbrella schemes). These changes were subject to a transitional period. The transitional period is now extended to 31 January 2027 from the previous expiry date of 30 January 2026, as provided for by the Collective Investment Schemes Sourcebook (Concentration Limits) Instrument 2026. This instrument entered into force on 29 January and feedback is published in Chapter 3 of the notice.

The European Commission (EC) has launched two consultations on reforming the rules for venture and growth capital funds. The consultations seeks to explore potential changes to the regulatory framework applying to such funds to support their development across the EU single market. This follows the identification of issues related to market fragmentation and unnecessary regulation.

The targeted consultation requests input from key stakeholders such as fund managers, institutional investors, public authorities and supervisors. It seeks insight into the barriers faced by managers and considers how the European Venture Capital Fund (EuVECA), European Social Entrepreneurship Funds (EuSEF) and the Alternative Investment Fund Managers (AIFMD) regimes could be changed to facilitate the development of such funds. In particular, the consultation includes specific questions on the calibration of thresholds under the EuVECA and AIFMD regimes, which trigger certain requirements, and the practical functioning of the EuVECA and EuSEF regimes.

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The European Securities and Markets Authority (ESMA) has published its final report with guidelines on stress test scenarios under the Money Market Funds Regulation (MMF Regulation). ESMA updates these guidelines at least annually. These new guidelines follow the previous version published in January 2025, along with their official translations in February 2025. This report sets out revised stress test scenarios and risk parameters to ensure that MMF managers have the necessary information to complete the reporting template required under Article 37 of the MMF Regulation and Commission Implementing Regulation (EU) 2018/708. The report's annex contains the full text of the updated guidelines and scenario calibrations for 2025 (with amendments shown in red). Once the official translations of the guidelines are published on ESMA's website, national competent authorities will have two months to confirm whether they will comply, after which the updated guidelines, including the new 2025 parameters, will apply. From that point, MMF managers must report results based on the new parameters in their quarterly submissions; until then, they should continue using the parameters set out in the 2024 guidelines. Separately, the European Systemic Risk Board published the adverse financial market scenario for the stress-testing exercise (dated 4 December 2025) that ESMA used to update the risk parameters in the guidelines.

The European Securities and Markets Authority (ESMA) has published its third report on marketing requirements and marketing communications under the regulation on cross border distribution of funds. Drawing on data submitted by national competent authorities, ESMA confirms that there have been no significant changes to national marketing rules since its previous 2023 report. The report now incorporates, for the first time, statistics on cross border fund marketing notifications. The new statistical insights show that Luxembourg and Ireland remain the dominant jurisdictions for notifying cross border fund marketing activity, representing 59% and 30% of notifications, respectively. Undertakings for collective investment in transferable securities account for the majority of notifications (56%), with alternative investment funds comprising the remaining 44%.

The Council of the EU and the European Parliament (EP) have reached a provisional political agreement on an updated retail investment strategy package to empower and protect consumers and increase competitiveness in the EU's financial markets. The package takes the form of a directive containing targeted amendments to a number of other EU directives in the area of financial services such as the Markets In Financial Instruments Directive (MIFID), the Solvency II Directive, the Directive For Undertakings For Collective Investment In Transferable Securities (UCITS) and the Alternative Investment And Managers Directive (AIFMD), and a regulation amending the Packaged Retail And Insurance-Based Investment Products (PRIIPs Regulation).

The Council of the EU and EP confirm that agreement has been reached in the following areas:

• Value for money – firms must identify and quantify all costs borne by investors related to the investment products they advise. Products failing to offer value for money should not be released onto the market and sold to retail customers, and who should be able to compare investment products' costs, charges, performance and non-financial benefits.
• Inducements – a new test will be introduced to ensure firms act in the clients' best interests, enabling them to distinguish inducements from other fees.

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The European Securities Markets Authority (ESMA) has published a report with amended guidelines on liquidity management tools (LMTs) of Undertakings for Collective Investment in Transferable Securities (UCITS) and open-ended Alternative Investment Funds (AIFs). The amendments aim to align with the regulatory technical standards (RTS) adopted by the European Commission on 17 November. To ensure consistency between the guidelines and the RTS, ESMA has made some targeted amendments to the guidelines in two areas: (i) the inclusion of investor-level redemption gates to mitigate first-mover advantage, and (ii) the calculation of implicit transaction costs for anti-dilution LMTs, which should only be considered where appropriate to the fund's investment strategy and estimated on a best-effort basis. The guidelines will be translated into all official EU languages and published on ESMA's website. National competent authorities will have two months to notify ESMA on whether they comply or intend to comply with the guidelines. The updated guidelines will apply from the RTS application date (which is specified as 16 April 2026), with a 12-month transitional period for existing funds.

The European Securities and Markets Authority (ESMA) has published a risk analysis report assessing the impact of its guidelines on the use of ESG or sustainability-related terms in fund names. The study found that the guidelines have improved consistency in the use of ESG terms by increasing alignment of fund names and their actual investment strategies and enhanced investor protection by reducing greenwashing risks. Analysis of nearly 1,000 shareholder notifications from the 25 largest EU asset managers revealed that 64% of funds mentioned in shareholder notifications changed their name, often to remove ESG terminology, while 56% updated investment policies to strengthen their sustainability focus. Additionally, funds with higher fossil fuel exposures were more likely to drop ESG terms from their names, whereas those retaining ESG terms have reduced fossil fuel holdings more than all other funds. ESMA concludes that its guidelines have driven convergence in the use of ESG terms and have reduced greenwashing risks.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/38 on enhancing fund liquidity risk management. The FCA sets out in detail the context for this consultation, citing the work carried out both in the UK and internationally in respect of liquidity risk management for collective investment schemes in recent years.

Key proposals the consultation paper seeks feedback on include:

• Requirements for authorised fund managers of undertakings for collective investment in transferable securities (UCITS) funds and non-UCITS retail schemes (NURS) to have anti-dilution tools available.
• Changes in respect of the "listed asset presumption", which is the presumption that a transferable security admitted to or dealt on an eligible market is presumed not to compromise an authorised fund manager's ability to redeem units.
• Removing the derogation from the eligibility tests for holding transferable securities and approved money-market instruments and guidance on eligible markets.
• New conflicts of interest requirement to ensure equitable treatment of unitholders.
• Updating guidelines issued by the European Securities and Markets Authority on liquidity stress testing and including the guidelines in the FCA handbook.
• Proposed guidance on effective liquidity risk management systems.

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The UK Financial Conduct Authority (FCA) has published its quarterly consultation paper No 50 inviting feedback on proposed amendments to its Handbook across reporting, fees, primary markets rules, the new Public Offers and Admissions to Trading Regulations (POATRs) framework and authorised fund concentration rules.

Key proposals include:

• Decommissioning three general insurance pricing practices returns (REP021a, REP021b and REP021d) and reducing the frequency of the baseline financial resilience report (FIN073) from quarterly to annually for firms that also submit RMA‑A and have GBP 150 million or less annual regulated revenue, while retaining quarterly submission for larger firms and those not submitting RMA‑A.
• Cutting the administrative fee for late regulatory returns from GBP250 to GBP100 and making minor clarifications to SUP reporting provisions.

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The European Commission (EC) has published a Communication to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions on further development of capital market integration and supervision within the Union, announcing a set of major legislative reforms. The package seeks to address obstacles to innovation and barriers to integration resulting from divergent rules, duplicative requirements and inconsistent supervision. The EC proposes a suite of amendments to key EU financial services and capital markets legislation in a package described as a central component of the savings and investments union (SIU), specifically a:

• Regulation which will amend: (i) the European Securities and Markets Authority (ESMA) Regulation; (ii) the European Markets Infrastructure Regulation (EMIR); (iii) the Markets in Financial Instruments Regulation (MIFIR); (iv) the Central Securities Depositories Regulation (CSDR); (v) the Distributed Ledger technology Pilot Regulation (DLTPR); (vi) the Markets in cryptoasset Regulation (MiCAR); and (vi) the Cross-Border Distribution of Funds Regulation (CBDR). 

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The European Securities and Markets Authority (ESMA) has published a peer review report on the supervision of depositary obligations under the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) and Alternative Investment Fund Managers Directive (AIFMD) frameworks. The review assessed five jurisdictions: Czechia, Ireland, Italy, Luxembourg and Sweden, with a focus on compliance with oversight and safekeeping obligations. While all national competent authorities (NCAs) have foundational supervisory frameworks in place, ESMA identified notable divergences in the depth and maturity of supervisory practices across jurisdictions. Czechia and Luxembourg fully met expectations, Ireland and Italy largely met expectations and Sweden only partially met expectations, prompting calls for an overall scale up of supervisory assessments, intrusiveness and intensity.

Key findings highlight the need for more frequent and risk-proportionate supervisory engagement, particularly given the concentration of depositaries and their potential systemic importance. There are also concerns over the depth and intrusiveness of supervisory assessments where depositaries entrust significant tasks to third parties. The report recommends that NCAs strengthen risk-based supervision by increasing the frequency and intrusiveness of engagement with higher-impact entities and ensuring risks are properly identified, assessed and mitigated. Jurisdiction-specific recommendations are detailed in the report's tables. ESMA will follow up on these recommendations and continue discussions on strengthening depositary supervision.

The International Organization of Securities Commissions (IOSCO) has issued a consultation report proposing 13 updated recommendations for valuing collective investment schemes (CIS). The revisions seek to update IOSCO's 2007 principles for the valuation of hedge fund portfolios and its 2013 principles for the valuation of collective investment schemes, in light of market developments, including increased exposure to illiquid and private assets and heightened retail participation. The key updates cover: oversight arrangement; governance under stressed market conditions; management of conflicts of interest; fair value; back testing; use of third-party valuation service providers; stale valuations; and record keeping. IOSCO emphasises that robust valuation practices are critical to ensure accurate net asset value calculations of funds and maintain investor protection and market confidence. The deadline for comments is 2 February 2026, with a final report expected in mid-2026.

The European Commission has adopted two Delegated Regulations: (i) Delegated Regulation supplementing the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (AIFMD) and; (ii) Delegated Regulation supplementing the Undertakings for Collective Investment in Transferable Securities Directive (Directive 2009/65/EC) (UCITS). These regulations lay down regulatory technical standards (RTS) specifying the characteristics of liquidity management tools (LMTs), following the recent amendments made to AIFMD and UCITS by Directive (EU) 2024/927.

The RTS aim to harmonise the characteristics of LMTs across the EU for open-ended AIFs and UCITS, enhancing investor protection and financial stability. The harmonised list of tools, which are set out in the annexes to the Directives, include: suspension of subscriptions, repurchases and redemptions; redemption gates; extension of notice periods; redemption fees; swing pricing; dual pricing; anti-dilution levy; redemption in kind; and side pockets. Under the amended Directives, managers must select at least two appropriate LMTs from this list for potential use, considering the fund's investment strategy, liquidity profile and redemption policy. The Council of the EU and the European Parliament will scrutinise the Delegated Regulations. If neither object, they will enter into force 20 days after publication in the Official Journal of the European Union and apply from 16 April 2026. The RTS also establish a transitional period of application for existing funds constituted before this date.

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

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

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The European Securities and Markets Authority (ESMA) has published its final report on the draft regulatory technical standards (RTS) for open-ended loan-originating alternative investment funds (OE LO AIFs), pursuant to the Alternative Investment Fund Managers Directive (AIFMD). Following consultation feedback, ESMA has made the following changes to the draft RTS: removed the requirement for Alternative Investment Fund Managers (AIFMs) to determine a target appropriate amount of liquid assets, instead AIFMs must ensure their OE LO AIFs have sufficient liquidity to honour redemption requests; revised the frequency of liquidity stress testing, requiring AIFMs managing OE LO AIFs to conduct such tests at least annually, rather than quarterly as previously proposed and; clarified certain provisions to improve interpretability. The final draft RTS have been submitted to the European Commission for adoption but, as the RTS are classified as non-essential Level 2 acts, they are not expected to be adopted before 1 October 2027 at the earliest.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/28, accompanied by a press release, outlining proposals to accelerate the adoption of tokenisation and tokenised funds in the UK. The proposals apply to authorised funds but the FCA's discussion and roadmap sections may be of wider interest to fund and asset managers, including managers of non-authorised funds. The FCA's proposals address fund tokenisation, and do not address unbacked assets such as cryptocurrencies.

The FCA's proposals include:

• Guidance for operating a tokenised fund under the Blueprint model.
• Rules and guidance for an alternative, streamlined dealing model for conventional and tokenised authorised funds, referred to as 'direct to fund' (D2F). D2F has wider application than just to tokenised funds, but the FCA thinks allowing this new dealing model will enable tokenisation.
• A roadmap to advance fund tokenisation and address key barriers.
• A discussion on future tokenisation models that use DLT to provide tokenised portfolio management at retail scale and how regulation may need to change to be fit for the future.

The deadline for responses to the consultation proposals is 21 November, except for the discussion chapter on future tokenisation models, which is 12 December. The FCA expects to publish a policy statement with final rules in the first half of 2026.

The UK Financial Conduct Authority (FCA) has published the findings from its multi-firm review of climate reporting by asset managers, life insurers and FCA-regulated pension providers under the Taskforce on Climate-related Financial Disclosures (TCFD) regime. The review found that the rules have strengthened firms' consideration of climate risks and improved transparency, but challenges remain around data availability and consistent, well-developed methodologies. Firms reported that while the disclosures are useful for institutional investors, they are often too complex for retail investors, particularly at the product level, where reports were also harder to find. Most firms were generally able to report on backward-looking data, such as carbon emissions, but struggled with providing quantitative data to support forward-looking disclosures like scenario analysis, limiting comparability between reports. Asset managers, in particular, viewed the rules as overly granular given their broader, overlapping sustainability disclosure obligations and called for simplification of the requirements. Firms also sought clarity on the future of the TCFD rules in light of the global shift towards ISSB standards, urging the FCA to ensure international alignment and a practical, industry-informed approach.

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The European Securities and Markets Authority has published an updated Q&A under the Undertakings for Collective Investment in Transferable Securities Directive. The update considers whether the manager of a feeder fund within the meaning of Article 58 of the UCITS Directive can charge a performance fee.

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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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.