The European Securities and Markets Authority (ESMA) has published official translations of its guidelines on stress test scenarios under the Money Market Funds Regulation (MMF Regulation). These guidelines apply to competent authorities, MMFs and managers of MMFs in relation to Article 28 of the MMF Regulation. In particular, and as specified in Article 28(7) of the MMF Regulation, they establish common reference parameters of the stress test scenarios to be included in the stress tests. The parts of the guidelines shown in red text will apply from 24 April. The other parts of the guidelines already apply from the dates specified in Articles 44 and 47 of the MMF Regulation.

The UK Financial Conduct Authority (FCA) has published a research note on AI's role in credit decisions, exploring the issue of AI explainability in the context of algorithm-assisted decision-making, using consumer credit decisions as a case study to test out different approaches. The researchers used an online experiment to study whether different kinds, or 'genres', of explanation lead to better consumer outcomes such as consumers' ability to judge whether algorithm-assisted decisions are erroneous. Specifically, the researchers tested whether participants were able to identify errors caused either by incorrect data used by the algorithm or by flaws in the algorithm's decision logic itself.

The experiment found that additional information may make it more difficult to spot errors because there is simply more information to review, encouraging participants to focus on whether this decision logic was followed rather than if the decision logic was sound. However, participants who were given more information about the inner workings of the algorithm's decision-making reported feeling more confident in their ability to judge the algorithm's decisions—but their actual judgement was worse on average. The findings reiterate the value of testing accompanying materials that may be provided to consumers when explaining AI, machine learning and/or algorithmic decision-making to understand how effective they are.

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The Wolfsberg Group has published FAQs on defining digital assets. The FAQs propose definitions to be used by financial institutions, policymakers, supervisors and regulators to understand the characteristics of digital assets, money laundering, terrorist financing and operational risks they generate, as well as serve as an input to financial institutions developing policies and appropriate controls. The Wolfsberg Group intends to supplement these FAQs in future with guidance on the risks and associated controls for digital assets in line with the concepts developed in the FAQs.

The Wolfsberg Group has also published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards.

The Wolfsberg Group has published guidance on payment transparency roles and responsibilities to supplement the Wolfsberg Group Payment Transparency Standards. The guidance discusses roles played by key actors in a payment chain and their respective responsibilities to adhere to payment transparency standards across a sample of commonly observed payment flows. It includes an example of cross-border payment between two countries, two parties and with no intermediaries, as well as an example of three different ways in which an intermediary agent payment service provider (PSP) can be involved in a payment to draw attention to what information is available to each actor from the payment message and what responsibilities they have in relation to payment transparency requirements. The guidance serves as a reference guide that can be used by all PSPs, regulators and standard setters.

The Wolfsberg Group has also published FAQs on defining digital assets.

The Financial Stability Board (FSB) has published summary terms of reference for its thematic peer review on the FSB global regulatory framework for cryptoasset activities. The objective of this peer review is to examine members' progress, experience and lessons learned in implementing the FSB global regulatory framework for cryptoasset activities. This includes the high-level recommendations for the regulation, supervision and oversight of both cryptoasset markets and activities, and global stablecoin arrangements. It will focus particularly on the: (i) regulatory frameworks and implementation status; (ii) data reporting; (iii) cross-border cooperation; and (iv) stablecoins. The FSB expects to publish the peer review report in October.

The FSB is seeking feedback from stakeholders as part of its thematic peer review and a questionnaire has been distributed to relevant jurisdictions to collect information. The FSB invites feedback on issues such as: (a) the impact of jurisdictional regulatory frameworks on decisions of cryptoasset issuers and service providers; (b) experiences and challenges faced by cryptoasset market participants in meeting the relevant regulatory and supervisory requirements; (c) how financial stability vulnerabilities of cryptoasset activities differ across jurisdictions; and (d) whether there are specific market practices and/or trends in certain geographies and/or segments that may pose a threat to financial stability.

Feedback should be submitted by 28 March.

Two delegated acts were published in the Official Journal of the European Union (OJ) in respect of the EU MiCAR.

• Commission Delegated Regulation (EU) 2025/303, which comprises regulatory technical standards specifying the information to be included by certain financial entities in the notification of their intent to provide crypto-asset services.
• Commission Implementing Regulation (EU) 2025/304, which comprises implementing technical standards for the standard forms, templates and procedures for the notification by certain financial entities of their intention to provide crypto-asset services.

Both sets of technical standards concern the notification requirements applied to certain firms seeking to provide crypto-asset services, where article 60 of MiCAR imposes a requirement to supply specified information to the competent authority of the applicant's home member state at least 40 working days before providing those services. The Delegated and Implementing Regulations will enter into force on the twentieth day following their publication in the OJ.

Two delegated acts were published in the Official Journal of the European Union (OJ) in respect of the EU Digital Operational Resilience Act (DORA). These are:

• Commission Delegated Regulation (EU) 2025/301, which comprises regulatory technical standards specifying the content and time limits for the initial notification of, and intermediate and final report on, major ICT-related incidents, and the content of the voluntary notification for significant cyber threats.
• Commission Implementing Regulation (EU) 2025/302, which comprises implementing technical standards for the standard forms, templates and procedures for financial entities to report a major ICT-related incident and to notify a significant cyber threat.

Both sets of technical standards relate to ICT-related incident management, one of the key pillars of the DORA legislation, and are mandated by article 20 of DORA which seeks to harmonise reporting content and templates in relation to ICT-related incidents and cyber threats. The Delegated and Implementing Regulations will enter into force on the twentieth day following their publication in the OJ.

The European Securities and Markets Authority (ESMA) has published technical standards in relation to the Central Securities Depositories Regulation (CSDR) Refit. There are three final reports with the draft technical standards that have been published. The first report covers the review and evaluation process of EU central securities depositories (CSDs), setting a harmonised approach for the information-sharing of CSDs and including a one-year implementation period for new reporting data that requires CSDs to update their processes (article 22 CSDR). The second report covers the assessment of whether an EU CSD in a host member state could be considered of substantial importance for the functioning of securities markets and investor protection (article 24a(13) CSDR). The third relates to notification requirements for third-country CSDs and aims to streamline the notification process (articles 25 and 69 CSDR). The final reports and draft technical standards have been submitted to the European Commission for adoption.

The European Central Bank (ECB) has published a press release confirming its decision to expand its initiative to settle transactions recorded on distributed ledger technology (DLT) in central bank money. The press release confirms that the Eurosystem will develop a settlement platform that is interoperable with trans-European automated real-time gross settlement express transfer system (referred to as TARGET) services, and will also consider a more integrated, long-term solution for settling DLT transactions in central bank money which will include international considerations. This expansion follows the Eurosystem's work last year on new technologies for wholesale central bank money settlement, which comprised various settlement experiments and included bank, financial market and DLT platform participants.

Representatives of the UK government and regulators spoke at the UK T+1 Accelerated Settlement Market industry event to confirm their support of the UK's move to a T+1 settlement cycle. The Economic Secretary to the Treasury confirmed that the government accepted the UK's Accelerated Settlement Taskforce's (AST) recommendation to move to T+1 on 11 October 2027. Mark Francis, Interim Director, Wholesale Sell-Side at the FCA and Sasha Mills, Executive Director, Financial Market Infrastructure at the Bank of England both gave speeches in support of the move and confirming regulatory expectation that the industry would work together to achieve this. In addition, on 19 February, the FCA published a new webpage, confirming that the FCA expects firms to engage with the recommendations of the AST to understand which are relevant for them, determine what is required to move to a T+1 settlement cycle, and plan early to deliver this transition. This can include budget considerations, operational systems changes and testing, agreements with third party providers and counterparty arrangements. The FCA may have discussions with firms directly or via trade associations to understand how firms are preparing for the deadline. Alongside their webpage, the FCA have also published a press release confirming their support.

The UK Prudential Regulation Authority (PRA) has published its updated approach to policy under the regulatory framework as set out in UK Financial Services and Markets Act 2000. The approach document has been amended following the consultation (CP27/23) and is published with the PRA's policy statement which provides feedback to the consultation responses. The CP had, in particular, asked for feedback on the PRA's secondary competitiveness and growth objective, the implementation of international standards, and stakeholder engagement, in the context of the PRA's enhanced objective and accountability requirements introduced by FSMA 2023.

With regard to the secondary competitiveness and growth objective, the PRA reiterates a number of the points raised by the Independent Evaluation Office during its evaluation of the PRA's approach to its new objective, including the PRA's clarification that the most appropriate way to advance the secondary competitiveness and growth objective is to take forward a wide range of initiatives across its general functions, rather than via a single flagship initiative.

Read more.

The UK Financial Conduct Authority (FCA) and the UK Payment Systems Regulator (PSR) have issued a joint feedback statement on the usage and impact of big tech and digital wallets (FS25/1). The feedback statement was accompanied by a press release and joint letter to the UK Competition and Markets Authority (CMA) regarding the CMA's invitation to comment on investigations in relation to certain mobile ecosystems. The feedback statement highlights four potential issues around big tech and digital wallets:

• First, there are competition concerns as between different digital wallets (and mobile ecosystems).
• In addition, there are competition concerns as between payment systems within digital wallets, particularly where digital wallets do not provide a choice of payment methods except for cards.
• Operational resilience and consumer rights and protection are an issue, given that reliance on digital wallets could impact the financial system's resilience if consumers do not have other means of payment.
• Finally, there are regulatory perimeter questions around whether the regulatory framework should include digital wallets in order to be more effective (although some responses raised concerns that this approach may hinder innovation).

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HM Treasury (HMT) has published a response to UK's Accelerated Settlement Taskforce (AST) report recommending a plan for the UK to move to a T+1 settlement cycle for securities trades. HMT accepts the recommendation of 12 'critical' and 26 'highly recommended' actions to facilitate a successful transition to T+1 and will introduce legislation making this change. HMT further accepts the recommendation of T+1 coming into effect on Monday 11 October 2027 and will legislate for T+1 to be mandatory from this date forward. On this basis, firms should now begin preparations for 11 October 2027 to be the first day of trading under a T+1 standard. HMT is engaging with European partners to support aligning this outcome with the EU markets.

In addition, HMT has also published a policy paper on the Terms of Reference of the Accelerated Settlement Taskforce, confirming that they have accepted all recommendations made and to update the objectives and governance structure of the Taskforce as it moves into the next phase of its work. HMT also published a press release on the move to T+1 and the broader UK growth and competitiveness agenda.

The European Supervisory Authorities (ESAs) have published a roadmap for the designation of critical ICT third-party service providers (CTPPs) under the EU Digital Operational Resilience Act (DORA). The roadmap of key dates between now and the end of the year. The roadmap sets out four milestones:

• By 30 April, the ESAs will collect the registers of information that financial entities submitted to the competent authorities.
• By the end of July, the ESAs will perform criticality assessments required under DORA and notify third-party service providers if they are classified as critical.
• By the first half of September, there will be a hearing period where ICT third-party service providers may object to the assessment, with a reasoned statement and supporting information.
• By the end of this year, the ESAs will have designated and published the list of CTPPs and started the oversight engagement.

Alongside the roadmap, the European Banking Authority published a press release confirming that ICT third-party service providers not designated as critical may voluntarily request to be designated as critical once the list of CTPPs is published, with details of how to make such a request to be provided soon. The ESAs also plan to organised a workshop with ICT third-party providers in Q2 this year, with details to be published in due course.

The European Securities and Markets Authority (ESMA) has published a consultation paper containing draft guidelines on supplements which introduce new securities to a base prospectus. This is further to the new EU Listing Act provision at article 23(4a) of the Prospectus Regulation that a supplement cannot be used to introduce a new type of security for which the necessary information has not been included in the base prospectus, and ESMA's mandate under new article 23(8) to develop guidelines to specify the circumstances in which a supplement is to be considered a new type of security that is not already described in a base prospectus.

ESMA is proposing the draft Guidelines to align member state practice on when a supplement is to be considered to introduce a new type of security in view of longstanding divergence in the supervision of "product supplements" (meaning supplements considered to introduce a new type of security that is not already described in a base prospectus).

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The EU T+1 Coordination Committee has published its summary of a meeting held on 6 February 2025. At the meeting, the European Commission representative indicated that the proposal to amend EU CSDR to shorten the securities settlement cycle was expected to be adopted shortly. A key point raised by the chair of the Industry Committee was that the strong will of the Industry Committee to exempt securities financing transactions from the T+1 requirement, and that it was important for the EU to align with the UK on this point. The meeting also discussed the consultation paper (which was published on 13 February 2025) and the chair of the Industry Committee provided updates on the workstreams and workplan, and a timetable for deliverables.

The European Securities and Markets Authority (ESMA) has published a consultation paper on the guidelines for the criteria on the assessment of knowledge and competence under Markets in Crypto-Assets Regulation (MiCAR). The guidelines relate to natural persons giving advice or information about crypto-assets or a crypto-asset service. In terms of approach, ESMA has taken as a reference the Markets in Financial Instruments Directive guidelines on the assessment of knowledge and competence.

ESMA proposes four guidelines. The first guideline is a general guideline to ensure that crypto-asset service providers (CASPs) take sufficient steps to ensure that their staff providing information or advice on crypto-assets or crypto-asset services possess the necessary knowledge and competence to fulfil their obligations. This includes an understanding of how to apply the CASPs internal policies and procedures designed to comply with MiCAR. Guideline two concerns criteria for staff giving information about the relevant crypto-assets or crypto-asset services. Guideline three concerns criteria for staff giving advice about crypto-assets or crypto-asset services, and addresses the minimum requirements for professional qualification and professional experience, as well as the minimum number of hours of continuous professional development or training per year. Finally, guideline four on organisational requirements states that CASPs' organisational requirements should ensure that the knowledge and competence of the staff giving information and advice on crypto-assets or crypto-asset services is assessed, maintained and updated appropriately.

The deadline for comments is 22 April. ESMA will publish a final report and guidelines in Q3 this year.

The European Securities and Markets Authority (ESMA) published advice from the Securities and Markets Stakeholder Group (SMSG) on the ESMA consultation paper on draft technical advice on investment research. The technical advice relates to changes to the Markets in Financial Instruments Directive (MiFID) regime for investment research in the context of the EU Listing Act legislative package. These changes allow for joint payments to be made for execution services and research, subject to certain conditions. The ESMA consultation paper proposed amendments to article 13 of Directive (EU) 2017/593 (referred to as the MiFID Delegated Directive).

The SMSG advice includes a summary of findings from academic studies on MiFID research provisions, and notes that there has been an improvement in research quality and mitigation of conflicts of interest, but a reduction in the overall quantity of research. The SMSG advice also notes that there has been a shift from traditional sell-side research to sponsored research for SMEs, and that there is a trend among asset managers to continue to pay for research separately (even in circumstances where they would be able to pay for it jointly with other services) due to the operational complexity of running two separate invoicing systems. The deadline for ESMA to deliver its technical advice to the European Commission is 30 April 2025.

The European Supervisory Authorities (ESAs) have published joint guidelines on the system established by the for the exchange of information relevant to the assessment of the fitness and propriety in the official EU languages. The joint guidelines were published previously with a final report on 20 November 2024, and relate to the assessment of fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions and financial market participants. The ESAs have developed a system which consists of a cross-sectoral database and these joint guidelines, with the aim of fostering a timely exchange of information between competent authorities. The guidelines in relation to data input in respect of natural persons and confidentiality apply from 17 February 2025, with the remaining guidelines applying in respect of natural persons from 15 May 2025. For legal persons, the guidelines in relation to data input apply from 30 January 2026, with the remaining guidelines applying from 30 April 2026.

The European Securities and Markets Authority (ESMA) has published a final report on the technical standards on the external reviewer regime under the European Green Bonds Regulation (EuGB). The regime requires external reviews of the pre-issuance factsheet and allocation report after full allocation of proceeds, and imposes certain requirements on external reviewers. The final report covers the regulatory technical standards (RTS) in relation to: (i) assessing senior management, board members and others involved in assessment activities; (ii) assessing sound and prudent management and conflicts of interest management; (iii) assessing knowledge and experience of analysts; and (iv) criteria applicable to outsourcing of assessment activities.

Respondents were broadly in support of ESMA's proposals. However, a key architectural change has been made in that the RTS on assessing knowledge and experience of analysts (under article 28(1) of the EuGB Regulation) has been merged into the RTS on assessing senior management, board members and others involved in assessment activities (under article 23(6) of the EuGB Regulation).

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The UK Financial Conduct Authority (FCA) has updated its webpage on transparency waivers and deferrals in light of the upcoming changes to the UK MiFIR transparency regime for bond and derivatives markets. The FCA added a notice to the webpage stating that, before applying, firms may wish to consider the implications of these changes as confirmed in the relevant policy statement, PS24/14. The notice highlights, in particular, the transitional amendments that have been made in respect of voice and request for quote (RFQ) trading systems, which will apply from 31 March 2025 in advance of the new rules, which will come into force on 1 December. The transitional requirement, set out in MAR TP 2 1.4R, confirms that for the period between 31 March 2025 and 30 November 2025, trading venue operators are not subject to certain pre-transparency requirements for non-equity instruments in respect of an RFQ system or voice trading system when operated by the trading venue operator.

The UK Financial Conduct Authority (FCA) has published information setting out its expectations for firms applying for collective investment schemes to be authorised as authorised unit trusts, authorised contractual schemes and authorised open-ended investment companies. The information covers specific questions as well as main areas to help applicants understand where they may need to provide further detail. Among other topics, the publication covers the FCA's expectations in relation to environmental, social and governance strategies and sustainability disclosure requirement (SDR) labels, and long-term asset funds which fund managers may find useful. For such funds, the FCA highlights that it expects applications intending to comply with SDR label rules to include the relevant aspects for the specific label as set out in the FCA rules and the FCA's policy statement PS23/16.

The European Securities and Markets Authority (ESMA) has published a press release confirming the launch of a Common Supervisory Action (CSA) with national competent authorities on compliance and internal audit functions of management companies of undertakings for collective investment in transferable securities (UCITS) and alternative investment fund managers in the EU. The CSA will assess the effectiveness of fund managers' compliance and internal audit functions in accordance with the relevant applicable provisions of the Alternative Investment Fund Managers and the UCITS Directives, looking at the adequacy of staffing, authority, knowledge and expertise. ESMA will publish the final report in 2026.

The UK government's Department for Culture, Media and Sport has published the Dormant Assets Parliamentary Review for the period from February 2022 to February 2025 in accordance with the Dormant Assets Act 2022. The review considers the expansion of the UK Dormant Assets Scheme, which allows firms to pay dormant monies to an authorised reclaim fund to fund good causes. Previously, the Scheme was available only to banks and building societies, but has been expanded to include the insurance and pensions, investment and wealth management, and securities sectors. Overall, the review found that the Scheme continues to deliver operational value and prioritise customer protection, but progress to operationalise the expanded scope of the Scheme has been slower than expected. This had been mainly due to barriers which relate to the expansion to the investment and wealth management sector which have now been resolved; in particular, certain UK regulatory rules which have now been amended, and a voluntary requirement that prohibited the authorised reclaim fund from accepting dormant investment assets which was lifted in January 2025. The review also presents data in relation to the transfers into, and payments out of, the Scheme over the relevant period. The next report will be laid in Parliament by February 2030.

The UK Financial Conduct Authority (FCA) has updated its webpage on extending the sustainability disclosure requirements (SDR) and labelling regime to portfolio managers, confirming that it no longer intends to publish a policy statement this year. The FCA had previously stated that, further to consultation paper CP24/8, it would publish a policy statement with final rules in the second half of this year. However, the updated webpage states that the FCA wants to ensure that the extension of the SDR and labelling regime delivers good outcomes for consumers, is practical for firms, and supports growth of the sector and so will continue to reflect on feedback and publish an update in due course. As a reminder, the SDR regime was originally introduced in November 2023, applying a new anti-greenwashing rule to all FCA-authorised firms and a range of disclosure, labelling and naming/marketing requirements to certain UK asset managers.

The UK Financial Conduct Authority (FCA) has updated its webpage on its consultation paper CP23/24: capital deduction for redress: personal investment firms. The consultation was issued in response to the FCA identifying significant redress liabilities falling to the Financial Services Compensation Scheme, in order to strengthen prudential requirements so that personal investment firms have to hold more capital for redress. The consultation is now closed, and the FCA has updated its webpage to confirm that it is considering feedback. However, the updated webpage also confirms that the FCA is looking across at feedback linked to other proposals including the call for input on modernising the redress framework, and its review of regulatory requirements following the introduction of the Consumer Duty. The FCA also confirms that it will continue to carry out increased monitoring of firms as part of its authorisation process, and highlights the update it published in January which sets out FCA expectations on redress liabilities, and what firms should and should not do to tackle polluting behaviour and meet their redress liabilities.

The European Commission (EC) has adopted a Commission Delegated Regulation supplementing the Digital Operational Resilience Act (DORA) with regard to RTS specifying the criteria used for identifying financial entities required to perform threat-led penetration testing (TLPT). Article 26(11) of DORA mandates the European Supervisory Authorities (ESAs), in agreement with the European Central Bank (ECB), to develop joint draft RTS in accordance with the ECB's European framework for threat intelligence-based ethical red teaming (TIBER-EU framework) to specify further the following: (i) the criteria to identify financial entities required to perform TLPT; (ii) the requirements regarding test scope, testing methodology and results of TLPT; (iii) the requirements and standards governing the use of internal testers; and (iv) the rules on supervisory and other cooperation needed for the implementation of TLPT and for mutual recognition of testing. The Delegated Regulation will enter into force on the 20th day following its publication in the Official Journal of the EU. The ECB has also published an updated version of the TIBOR-EU framework that aligns with the DORA RTS on TLPT.

The European Securities and Markets Authority (ESMA) has published a consultation paper on a Delegated Regulation amending Commission Delegated Regulation (EU) 2018/1229, which supplements the Central Securities Depositories Regulation (CSDR) with regard to RTS on settlement discipline.

The Regulation amending the CSDR (CSDR Refit) introduced in Article 6(5) and Article 7(10) of the CSDR two mandates for ESMA to develop draft RTS in relation to settlement discipline measures and tools to improve settlement efficiency. ESMA plans to fulfil these mandates by amending Commission Delegated Regulation (EU) 2018/1229, including on timing and means for sending allocations and confirmations, on requiring all central securities depositories (CSDs) to offer hold and release and partial settlement functionalities and to enable automated use of intraday cash credit secured with collateral, as well as on the requirements for CSDs to report top failing participants, and the information on settlement fails to be published by CSDs. ESMA also explores additional tools to improve settlement efficiency, for which ESMA's preliminary view is that no regulatory action is required, but on which it would nevertheless like to receive stakeholders' views. These include topics such as the CSD business day schedule, the Standard Settlement Instructions format, the Unique Transaction Identifier (UTI), Place of Settlement (PSET) and Place of Safekeeping (PSAF). The deadline for comments is 14 April. ESMA expects to publish a final report and submit the draft RTS to the European Commission by October.

Eight Delegated Regulations supplementing the Markets in Crypto-assets Regulation (MiCAR) have been published in the Official Journal of the European Union (OJ).

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The Prudential Regulation Authority (PRA) published a policy statement (PS2/25) on streamlining firm-specific capital communications which simplifies the content and process of the firm-specific capital communications used to set Pillar 2A, the systemic buffers and the additional leverage ratio buffer (ALRB). These changes have no impact on firms' capital requirements. The PRA also provides feedback to responses received to Chapter 3: Streamlining firm-specific capital communications of its September 2024 consultation on streamlining the Pillar 2A framework (CP9/24). In response to the feedback, the PRA has made one small change to paragraph 5.18 of supervisory statement SS31/15 on the internal capital adequacy assessment process (ICAAP) and the supervisory review and evaluation process (SREP). This change has no meaningful effect on the policy. The new policy and rules will take effect on 31 March. This is consistent with the consultation, and firms are not required to take any specific actions to implement the changes.

The European Banking Authority (EBA) has published its final report on draft ITS on IT solutions for public disclosures by institutions, other than small and non-complex ones, relating to Pillar 3 disclosures under the Capital Requirements Regulation (CRR).

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The European Commission (EC) has published a legislative proposal it has adopted for a Regulation amending the Central Securities Depositories Regulation (CSDR) to shorten the settlement cycle for EU transactions in transferable securities.

The proposed Regulation shortens the settlement period under Article 5(2) of the CSDR from two business days after trading takes place (T+2) to one business day (T+1). The proposal is intended to: (i) promote settlement efficiency and increase the resilience of EU capital markets; (ii) improve the liquidity of EU capital markets; and (iii) eliminate the costs linked to the misalignment of settlement cycles between EU and other jurisdictions. Due to the urgency to act given international developments, the EC has also prepared a Commission Staff Working Document alongside this proposal, analysing the impacts of an EU move to a shorter settlement cycle. The document assesses the costs and benefits of a shorter settlement cycle in the EU, highlighting that the mostly one-off costs should, over time, be outweighed by the long-term benefits of lower counterparty and market risks, more efficient and timely settlement and increased attractiveness of EU capital markets for investors. The EC has also published a set of FAQs alongside its proposal. The proposed Regulation will enter into force on the 20th day following its publication in the Official Journal of the EU and will apply from 11 October 2027.

The Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 (SI 2025/124) has been published, alongside an explanatory memorandum. It was made on 5 February and comes into force on 31 March.

The instrument makes amendments to the legislation which gives effect to the UK Emissions Trading Scheme (UK ETS). The UK ETS incentivises decarbonisation by requiring operators to purchase allowances based on carbon emissions. Some operators are given free allocation of allowances to mitigate the risk of carbon leakage. The scheme has two allocation periods, 2021‒2025 and 2026‒2030, in which free allocation is calculated and provided to eligible operators. The SI moves the start of the second allocation period for stationary installations from 2026 to 2027, making 2026 a standalone year, and provides for the calculation of free allocation in the 2026 standalone scheme year. The instrument also makes three changes to other aspects of the scheme. Specifically, these will:

• require the publication of full details of transactions between accounts in the scheme's Registry after a three-year delay;
• add limited exceptions to the prohibition on disclosure of Scheme data in order to support the development and implementation of related policies, and support the statutory functions of the Climate Change Committee (CCC); and

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The Financial Conduct Authority (FCA) has updated its webpage on the notification and disclosure of net short positions, providing an update on short selling. Following the publication of the Short Selling Regulations 2025 in January, which set out high level requirements for the new UK short selling regime, the FCA has confirmed that it will consult on its new short selling rules in Q3 this year. The Short Selling Regulations 2025 give the FCA powers to set out more detailed rules to complete and implement the new regime; these powers have already entered into force. The FCA's rules and the remaining parts of the Regulations that are not already in force will be implemented once the FCA has finalised the new rules and has allowed time for the FCA to make any technical and operational changes, including the new requirement to publish aggregated net short positions by issuer. In the meantime, the existing UK short selling regime will continue to apply, including the current public disclosure of individual firms net short positions in issuers at the 0.5% threshold and above.

The European Commission (EC) has published a communication outlining its 2025 work programme. The EC also published the annexes to the 2025 work programme which include:

• Annex I – new initiatives. The table in this annex lists the new initiatives the EC intends to adopt in 2025 to deliver on its priorities;
• Annex II – annual plan on evaluations and fitness checks. The EC's annual plan of evaluations and fitness checks is designed to ensure continuity of the simplification and burden reduction exercise;

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The European Banking Authority (EBA) has published a final report with amending guidelines in respect of Guidelines EBA/GL/2019/04 on ICT and security risk management. The EBA reviewed the Guidelines in light of the Digital Operational Resilience Act (DORA), which introduced harmonised requirements for ICT, risk management framework (RMF), incident reporting and third-party risk management and testing for certain financial entities. The entities subject to DORA and the related RTS on RMF overlap with those subject to the Guidelines. Therefore, to ensure transparency and legal certainty, the EBA reviewed the Guidelines and concluded that the entities subject to the Guidelines should be narrowed down, and the scope of the Guidelines should be reduced to cover certain institutions providing payment services which are not in scope of DORA, and guidelines on relationship management of payment services where this is not covered by the DORA requirements. The amending guidelines will be translated into the official EU languages and apply by two months after issuance (at the latest).

The European Central Bank (ECB) has published an updated version of the threat intelligence-based ethical red teaming framework (TIBER-EU framework) (dated January) to align with the Digital Operational Resilience Act (DORA) RTS on threat-led penetration testing (TLPT) (see item above). The ECB also published a news item on the updated framework.

The TIBER-EU framework enables EU and national authorities to work with financial and other entities to put in place a programme to test and improve their resilience against sophisticated cyber-attacks. It also sets out detailed guidance on how to complete DORA TLPT in a qualitative, controlled and safe manner, applying a uniform approach across the EU. The updates introduced in the framework include: (i) aligning the process steps with the deliverables derived from the DORA RTS on TLPT; (ii) specifying purple-teaming as mandatory under TIBER-EU, as prescribed in the DORA RTS; (iii) introducing terminological changes to ensure consistency with DORA terminology, e.g., "White Team" to "Control Team" (iv) providing advice on how to assess the quality of a provider in the updated Guidance for Service Provider Procurement; (v) moving away from the requirement for authorities that want to implement TIBER-EU to publish a full national implementation guide; authorities can instead refer to the adoption of the TIBER-EU documentation and publish a short implementation document described in the framework; and (vi) establishing TIBER-EU guidance documents to facilitate the implementation of different parts of the framework and to ensure a secure and controlled TLPT execution.
 

The European Central Bank (ECB) has published a report clarifying the internal capital adequacy assessment process (ICAAP) and the internal liquidity adequacy assessment process (ILAAP), as well as the respective package submissions. The ECB reminds banks of its main supervisory expectations on sound and effective capital and liquidity management in line with the ECB Guides on ICAAP and ILAAP published in November 2018. The ECB also outlines some clarifications on the governance around the submissions and key content areas which should be reflected in ICAAP and ILAAP packages. The report notes that it remains banks' responsibility to determine and apply the most appropriate approach to ensure sound capital and liquidity adequacy assessment processes tailored to their own specificities. Therefore, the ECB's clarifications focus on sound practices instead of setting additional expectations or requirements. They should be considered by banks to refine or improve their capital and liquidity management practices. Regarding the technical details around ICAAP and ILAAP package submissions, the note "Technical implementation of the EBA Guidelines on ICAAP information collected for SREP purposes" that was sent to banks in February 2017 remains applicable and is included in the annex to the report.

The European Commission (EC) has published a draft Delegated Regulation amending Commission Delegated Regulation (EU) 2022/930 regarding fees relating to the supervision by ESMA of consolidated tape providers (CTPs). Commission Delegated Regulation (EU) 2022/930 supplements MiFIR by specifying fees relating to the supervision by ESMA of data reporting service providers (DRSPs), as required under Article 38(n) of MiFIR.

The draft Delegated Regulation:

• clarifies that Commission Delegated Regulation (EU) 2022/930 covers all DRSPs subject to ESMA supervision, including CTPs;
• introduces a fixed one-off authorisation fee per CTP of EUR100,000. The amount of the one-off authorisation fee for CTPs is higher compared to the amount of the one-off authorisation fee for approved publication arrangement (APAs) and approved reporting mechanism (ARMs), given the complexity of the authorisation process for CTPs. That fee is lowered to EUR50,000 where an already authorised CTP applies for authorisation to provide the services of an APA, ARM or CTP for a different asset class; and

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The European Commission (EC) has published a call for evidence on targeted amendments to the Capital Requirements Regulation (CRR) to adjust the prudential treatment of securities financing transactions (SFTs) under the net stable funding ratio (NSFR).

Under Article 510(8) of the CRR, until 28 June 2025, EU credit institutions can apply lower required stable funding (RSF) factors for SFTs and unsecured transactions with a residual maturity of less than six months than those set out under the Basel standards. Under Article 510(7) of the CRR, the EC has the power to adopt a legislative proposal to amend provisions in the CRR on the treatment of these instruments under the NSFR. The targeted amendments therefore aim to make permanent the current transitory prudential treatment for SFTs and unsecured transactions with a residual maturity of less than six months, with financial customers, for the purpose of the NSFR (i.e. to extend the current treatment also beyond 28 June 2025, and permanently). The EC is proposing to make this treatment permanent on the basis that the higher RSF factors that would otherwise apply would make these instruments more costly in the EU and would consequently harm the demand for collateral and the liquidity in the collateral markets. The EC is also responding to concerns that the decisions of the U.S. and the UK to maintain lower RSF factors than under the Basel standards for these instruments on a permanent basis may lead to a loss of competitiveness for EU banks. The deadline for responses to the call for evidence is 10 March 2025.

The European Securities and Markets Authority (ESMA) has published two consultation papers on central counterparty (CCP) authorisations, extensions and validations under the European Market Infrastructure Regulation 3 (EMIR 3).

The first consultation paper is on the conditions for extensions of authorisation and the list of required documents and information for applications by CCPs for initial authorisations and extensions. For extensions of services and activities, Articles 15, 15a, 17 and 17a of EMIR now distinguish between a "normal extension" of authorisation procedure, an accelerated procedure and changes that can benefit from an exemption from authorisation. Under Article 14(6), 15(3), 17a(5) and 15a(2) of EMIR, ESMA is mandated to develop four draft RTS specifying: (i) the list of documents that are to accompany an application for authorisation and an application for an extension of authorisation; (ii) the conditions for the accelerated procedure referred to in Article 17a(1), points (a) to (e), of EMIR; (iii) the procedure for consulting ESMA and the college on whether or not those conditions are fulfilled and; (iv) the type of extension of services or activities that could benefit from an exemption from authorisation.

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The Financial Conduct Authority (FCA) has updated its webpage on bond consolidated tape (CT) confirming that the tender documents for the process to appoint a bond CT provider (CTP) will be published by 7 March, instead of the original proposed date of 31 January. Given this revised publication date, the FCA will conduct the procurement of a bond CTP under the Procurement Act 2023, and the tender will follow the two-stage process as described in CP23/33 on the CT framework for bonds. The tender documents will be published on the FCA's procurement portal and will contain details of: (i) the award process; (ii) the licences the successful bidder will need to provide; and (iii) how to participate in the tender and the information firms have to submit to the FCA as part of the application process. The FCA will publish a draft contract between the CTP and the FCA. Potential bidders will need to register on the FCA's procurement portal to access the relevant documentation.

The Financial Ombudsman Service (FOS) has published a policy statement on its new fee rules regarding complaints that are referred to it by certain claims management companies (CMCs) and other professional representatives acting on behalf of complainants. The rules are aimed at encouraging CMCs to consider the merits of complaints more diligently before referring them to the FOS. The FOS will introduce a maximum £250 case fee for each complaint a CMC refers to it exceeding the annual free case provision of ten per financial year. This is to reflect a proportionate contribution to the costs incurred by the FOS, ensuring adequate resources continue to be available to resolve disputes quickly. However, there will be a £75 minimum case fee for all cases referred by CMCs, regardless of the outcome of the complaint, in the interest of proportionality and fairness. If the complaint is upheld in favour of the complainant, the CMC will receive £175 credit. However, if the case outcome is not in favour of the complainant, then the respondent firm's case fee will be reduced to £475, from £650 for the current financial year. Under the new rules, this will mean that the overall aggregate charge from both parties will be £725 for a single complaint, whatever the outcome of the case. In relation to late payment of case fees, which was previously a £250 fixed fee plus interest, this will be replaced with a variable charge up to 25% of the outstanding debt, based on the cost and effort required to recover it. The rules will come into force on 1 April and will apply in relation to complaints referred to the FOS on behalf of complainants on, or after, this date.

The European Commission (EC) has published a draft Delegated Regulation amending Commission Delegated Regulation (EU) 2022/803 by specifying rules of procedure for the exercise of the power to impose fines or periodic penalty payments by the European Securities and Markets Authority (ESMA) regarding data reporting service providers (DRSPs).

Commission Delegated Regulation (EU) 2022/803 specifies the rules applying to ESMA for the exercise of power to impose fines or periodic penalty payments regarding two specific types of DRSPs, approved publication arrangements and approved reporting mechanisms. Consolidated tape providers (CTPs), which are also DRSPs, were intentionally left out of scope. This was due to the absence of entities providing consolidated tape services in the EU and because the review of the rules governing CTPs under the EU Markets in Financial Instruments Regulation (MiFIR) was still ongoing at that time. Therefore, in light of the upcoming CTP authorisation process introduced by MiFIR II, it is necessary to amend the scope of Commission Delegated Regulation (EU) 2022/803 to ensure it covers all DRSPs, including CTPs. The deadline for comments on the draft Delegated Regulation is 10 March.

The European Commission (EC) has published draft guidelines on the definition of an AI system to explain the practical application of the legal concept, as anchored in the EU AI Act. The EC aims to assist providers and other relevant persons in determining whether a software system constitutes an AI system to facilitate the effective application of the rules. The AI Act does not apply to all systems, but only to those systems that fulfil the definition of an "AI system" within the meaning of Article 3(1) of the EU AI Act. The definition of an AI system is therefore key to understanding the scope of application of the EU AI Act. These guidelines take into account the outcome of a stakeholder consultation and the consultation of the European Artificial Intelligence Board.

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The European Banking Authority (EBA) has published a report on the implementation of the first phase of the short/medium term objectives in their interest rate risk in the banking book (IRRBB) heatmap. In the report, the EBA sets out a number of observations and recommendations, including in relation to:

• the materiality of non-maturity (NMD) behavioural assumptions and the complexity of their modelling. This includes a non-restrictive list of risk factors impacting NMD repricing behaviour and a toolkit to support supervisors in their analysis of NMD modelling.
• the complementary dimensions to the supervisory outlier test (SOT) on the Net Interest Income (NII) metric. The report discusses the additional dimensions that supervisors could consider for institutions defined as outliers.
• the expected approach to model and project commercial margins of NMD, which are subject to behavioural optionality, in the SOT on NII.
• hedging strategies.

Going forward, the EBA intends to continue assessing the impact of the IRRBB regulatory package and interacting closely with interested stakeholders. As medium/long term objectives of the heatmap, the EBA will monitor the five-year cap on the weighted average repricing maturity of NMD and credit spread risk arising from banking book related aspects, primarily regarding the perimeter of its application.

The House of Lords Financial Services Regulation Committee (FSR Committee) published a report on the Financial Conduct Authority's (FCA's) proposal to publicise enforcement investigations, in the spirit of "naming and shaming". This report follows the FCA's consultation on 27 February 2024 (CP 24/2), which set out its proposed new approach, and its revised proposals published in November 2024 (CP 24/2, Part 2), following engagement with industry.

The FSR Committee report finds that the FCA did not make a convincing case for why a change to its existing powers is required, nor did it convincingly show the proposed new public interest framework struck a balance between benefits to consumer protection and managing potential risks to firms, individuals and market stability. The FSR Committee stresses that, after the current consultation closes (on 17 February 2025), the FCA should be transparent about the feedback received and be able to demonstrate that industry concerns have been addressed, or otherwise should not proceed with the changes. The report also makes a series of recommendations, including that the FCA:

• ensures, going forward, consultations are properly registered on the Regulatory Initiatives Grid and carries out earlier engagement with the sector where appropriate.
• publishes a 'lessons learnt' document setting out where it went wrong and how to prevent similar mistakes.
• engages with HM Treasury over any future developments relating to its enforcement investigations.
• provides a detailed analysis of the direct costs to the sector as part of its proposals.

The Accelerated Settlement Taskforce Technical Group has published an implementation plan for the UK's transition to T+1 settlement, including a recommendation that the UK moves to T+1 on 11 October 2027. This aligns with the EU's proposed implementation date for T+1 (as announced by ESMA on 18 November 2024). The plan recommends the proposed scope of changes to be made to the UK Central Securities Depositories Regulation to facilitate the UK's transition to T+1, whilst remaining flexible enough to accommodate additional jurisdictions which may choose to transition on the same date as the UK The plan includes a UK T+1 Code of Conduct containing the scope of T+1 (i.e., the categories of instruments and transactions to be covered and any exemptions) and a timetable of recommended actions to enhance market practices. It identifies 12 critical actions in various business areas to be implemented by market participants to ensure the transition plan is sustainable.

The European Central Bank (ECB) has published Decision (EU) 2025/222 relating to access by non-bank payment service providers (NB-PSPs) to Eurosystem central bank operated payment systems and central bank accounts. The EU Instant Payments Regulation (Regulation (EU) 2024/886) introduced certain changes to the EU Settlement Finality Directive (SFD) and Payment Services Directive (PSD 2), including adding NB-PSPs to the list of institutions eligible to become participants in payment systems designated under the SFD and permitting NB-PSPs to deposit their clients' funds for safeguarding in a separate account in a bank or central bank, at the central bank's discretion.

The ECB's decision: (i) sets out the circumstances in which a Eurosystem central bank should provide access to central bank operated payment systems, (ii) prohibits Eurosystem central banks from offering or providing safeguarding accounts to NB-PSPs or crypto-asset services providers, (iii) determines the maximum amounts that may be held by an NB-PSP across its accounts at any given central bank operated payment system, and (iv) provides for penalties in the event that an NB-PSP fails to comply with the maximum holding amount limit or requirements for access to central bank operated payment systems.

The Decision will enter into force on 26 February 2025 and will apply from 9 April 2025.

For more information on the issues and developments relating to fintech, see our blog A&O Shearman on fintech and digital assets.

The Financial Conduct Authority (FCA) has published a policy statement (PS25/1) on reforming the commodity derivatives regulatory framework. The policy statement sets out the FCA's response to feedback on its consultation paper on the subject (CP23/27) and includes its final rules and guidance to be included in the FCA Handbook. Key changes made in response to the consultation feedback include: Scope of the position limits regime: the regime will be limited to the 14 critical contacts consulted on, including LME Aluminium and LME Tin. However, the approach to contracts that are closely related to these critical contracts but outside the scope of position limits will be less prescriptive than consulted on, allowing trading venues more discretion to calibrate scope. Exemptions: the FCA's proposed requirement for trading venues to only grant the hedging exemption where they are satisfied that the exempt positions can reasonably be managed—the so-called risk management condition—is being amended to be less prescriptive. Non-financial entities will no longer be required to submit a detailed stress test.

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