The European Central Bank (ECB) has published an open letter to CEOs of significant institutions on AI related cybersecurity threats. The ECB warns that advances in AI are accelerating vulnerability discovery and exploitation, marking a long-term shift in the cyber threat landscape rather than a temporary or tool-specific risk. The letter identifies bank management bodies as primarily responsible for responding to the evolving cyber risk, suggesting they may need to revisit ICT investments, resource allocation and bank information and communication technology (ICT) risk-tolerance frameworks, and strengthen governance and control systems where necessary.

The ECB expects significant institutions to assess the impact of the evolving threat landscape and to develop a comprehensive action plan to strengthen relevant controls. The plan should build on existing cyber-risk strategies, cover short- and longer-term measures, allocate resources, assign responsibilities and set implementation timelines. The action plan must be submitted to the respective joint supervisory team (JST) by 31 October after which the JST will discuss the plan with the bank and monitor progress.

In the short term, the ECB expects banks to prioritise vulnerability and patch management, monitoring and detection, AI-enabled defensive capabilities, third-party ICT risk management, and protection of perimeter technologies and externally exposed ICT assets. Longer-term measures should include reinforcing defence-in-depth and cyber hygiene, modernising legacy or unsupported technology, and strengthening response, recovery, crisis-management and information-sharing arrangements.

The ECB also urges banks to remediate outstanding ICT-related supervisory findings without delay, noting that unresolved weaknesses identified through prior supervisory activity may become increasingly material in the evolving threat landscape.

The ECB confirms that DORA requirements remain highly relevant and that it will extend the deadline for the annual IT Risk Questionnaire from September 2026 to February 2027.  The ECB also notes that the responsible CERT (Computer Emergency Response Team) / CSIRT (Computer Security Incident Response Team) authorities may provide additional guidance. For more information, you may like to read our client bulletin titled "ECB requires significant institutions to address AI-enabled cybersecurity threats".

The European Securities and Markets Authority (ESMA) has published an interim report on the effectiveness of the Active Account Requirement (AAR) under the revised European Market Infrastructure Regulation 2024/2987 (EMIR 3), alongside the first annual report of the Joint Monitoring Mechanism (JMM), which monitors developments and financial stability risks across the EU clearing ecosystem.

ESMA's findings in the interim report indicate early signs of increased clearing activity at EU central counterparties (CCPs), particularly among smaller firms, with some entities fully relocating positions to the EU. The reports also identify a gradual but limited shift in certain products from systemically important third-country CCPs (Tier 2 CCPs) to EU CCPs. The interim report constitutes the first stage of a two-stage process of assessing implementation of the AAR, and its findings should be considered as preliminary. ESMA will complete a final assessment of the AAR in 2027 once additional data becomes available.

Looking more broadly at the EU clearing ecosystem, the JMM report highlights significant cross-border interdependencies, particularly between the EU and the U.S. It finds that EU entities, primarily banks, have considerable exposures to US CCPs, while U.S firms are active participants in EU and Tier 2 CCPs, and provide essential services such as liquidity, custody, and payments. While these interdependencies are said to support market efficiency and liquidity, the report states they may also transmit financial shocks across jurisdictions. In addition, the JMM noted an expansion in the range of products and asset classes cleared in the EU, and conducted a stocktake of existing EU-wide stress testing exercises to identify potential synergies for monitoring risks across the wider clearing ecosystem.

The draft Over the Counter Derivatives (Intragroup Transactions) Regulations 2026 were laid before the UK Parliament and published, accompanied by an explanatory memorandum. The proposed Regulations aim to replace the temporary intragroup exemption regime (TIGER), which expires on 31 December, with a permanent framework for intragroup exemptions from clearing and margin requirements under the UK European Market Infrastructure Regulation (UK EMIR). The draft Regulations amend the definition of an intragroup transaction in Article 3 of UK EMIR so that any transaction between entities within the same consolidated group qualifies as intragroup, regardless of the jurisdiction in which those entities are established. They also amend the processes applicable to the intragroup exemptions in Article 4 and Article 11 of UK EMIR and provide for a notification process for transactions between a UK entity and an overseas entity in the same group or between two overseas entities in the same group, subject to a 30-day period within which the FCA can object. Finally, the Regulations also include transitional provisions to ensure that firms already benefiting from intragroup exemptions granted under TIGER can continue to rely on those exemptions after TIGER expires without having to submit a new notification to the FCA, provided certain conditions are met.

The draft Regulations were initially published for technical feedback in November 2025. While feedback was generally positive, some respondents requested that the notification requirement to the FCA be removed entirely to lighten the regulatory burden even further. The FCA has not made this change to ensure that it maintains appropriate regulatory oversight of market activity. Feedback was otherwise focused on drafting points to ensure the legislation would operate as intended and deliver the desired policy effect. Subject to Parliamentary approval, the new regime is expected to come into force before the expiry of TIGER on 31 December.

The UK Financial Conduct Authority (FCA) has published Primary Market Bulletin 64, setting out its findings from a 2025 follow-up review of total voting rights (TVR) disclosures and providing observations on significant transaction notifications under the UK Listing Rules (UKLR). The FCA found that, while most issuers disclosed information relevant to TVRs, some announcements lacked sufficient clarity because they neither contained a dedicated TVR subsection nor made any direct mention of the total number of voting rights. This made it difficult for shareholders to identify the TVR used to calculate shareholding thresholds.

The FCA reminds issuers to confirm TVR figures clearly, use appropriate headline disclosure classifications where possible, and refer expressly to "total voting rights" when such information is included within broader announcements.

The FCA also reported on its review of significant transaction notifications under the UKLR, following the July 2024 reforms that removed the requirement for commercial companies with equity shares to publish an FCA-approved circular and obtain shareholder approval for significant transactions. Instead, companies are now required to notify shareholders under a notification-based regime. The FCA observed differing approaches to the number and presentation of risks disclosed by companies and noted that some issuers relied on overly generic risk disclosures. The FCA reminds issuers that risk disclosures should be tailored to the company, taking into account the nature and circumstances of the transaction, and should clearly articulate the specific risks posed to the company rather than relying on generic descriptions.

On board statements, the FCA noted that some issuers had not used the prescribed wording required by the UKLR. The FCA emphasises that issuers must follow the prescribed text and that bespoke wording that dilutes the intent of the rule is not acceptable. Board statements should therefore include the wording: "the transaction is, in the board's opinion, in the best interests of security holders as a whole". The requirement to use prescribed wording also applies to the fair and reasonable statement in related party transaction notifications under UKLR 8.2.2R(4).

The draft Building Societies Act 1986 (Assimilation to Company Law and Changes to Funding Limit) Order 2026 has been published and laid before Parliament, alongside an explanatory memorandum. The draft Order amends the Building Societies Act 1986 (BSA 1986) to align the provisions on common seals and the execution of documents by building societies with the equivalent regime under the Companies Act 2006. Building societies will therefore be able to choose whether to execute documents using a common seal or through authorised signatories, bringing them into line with the more flexible arrangements available to companies.

In addition, under section 7 of the BSA 1986, subject to specific exemptions, at least 50% of a building society's liabilities must be shares owned by individuals (known as "the funding limit"). The draft Order makes provisions to exclude certain sources of funding for the purposes of calculating the funding limit. This includes: liquidity facilities which form part of the BoE's sterling monetary framework; debt instruments issued by building societies to meet BoE's Minimum Requirements for Own Funds and Eligible Liabilities (MREL); and sale and repurchase agreements entered into by building societies using High Quality Liquid Assets held to meet the UK Prudential Regulation Authority's Liquidity Coverage Requirement.

These changes are intended to ensure building societies are not discouraged from practices which support prudent management of liquidity, and that instruments issued to meet MREL requirements are treated appropriately with other excluded regulatory capital instruments. The Order is expected to come into force on 1 January 2027.

The UK Financial Conduct Authority (FCA) has published The Mills Review report, based on an independent review led by Sheldon Mills, Executive Director, Consumers and Competition at the FCA, examining the potential impact of AI on retail financial services by 2030 and beyond. The review concludes that AI is likely to drive a transition from human-led financial activity to increasingly AI-enabled and delegated services, with firms embedding AI across a wide range of functions and consumers making greater use of AI tools and agents to manage their finances. The review identifies four key systemic shifts arising from AI adoption: the transformation of AI becoming core to firms; the emergence of AI-led consumer journeys; changes to competition and market power; and the amplification of financial crime and cyber risks.

While it considers the UK's existing outcomes-based regulatory framework, including the consumer duty, senior managers and certification regime and operational resilience requirements, to be broadly fit for purpose, it highlights the need for them to evolve to keep pace with AI developments.

To support the FCA, the review sets out seven priority recommendations for consideration, including:

• Securing and adapting the regulatory perimeter.
• Strengthening system-wide coordination and oversight.
• Monitoring the transition to autonomous models and adapting regulatory frameworks.
• Scaling up the FCA's AI Lab to support AI models and system innovation in financial services.
• Enabling the foundations for agentic finance.
• Building and adopting an AI-enabled agentic supervisory model.
• Developing a trusted public-interest AI-enabled financial capability service.

The European Commission has adopted two Delegated Regulations under the Central Securities Depositories Regulation No 909/2014 (CSDR):

• The first Delegated Regulation amends the regulatory technical standards (RTS) laid down in Commission Delegated Regulation (EU) 2018/1229 on settlement discipline, to introduce measures aimed at improving settlement efficiency in the EU and supporting the transition from a T+2 to a T+1 settlement cycle on 11 October 2027. The revised RTS strengthen allocation, confirmation and settlement processes, establish earlier deadlines for the provision of settlement information by professional and retail clients, and enhance the monitoring, reporting and analysis of settlement fails. The Delegated Regulation is based on the final report published by the European Securities and Markets Authority (ESMA) in October 2025.
• The second Delegated Regulation amends the RTS laid down in Delegated Regulation (EU) 2017/392 regarding the information that central securities depositories (CSDs) must provide to competent authorities as part of the review and evaluation process under Article 22(1) of the CSDR. The amendments align the RTS with the reforms introduced by the CSDR Refit Regulation (EU) 2023/2845. The Delegated Regulation specifies: (i) the information the CSD is to provide to the competent authority for the purposes of the review and evaluation; (ii) the information that the CSD's competent authority is to supply to other authorities when sharing the results of the review and evaluation; and (iii) the information that the competent authorities responsible for supervising different CSDs within the same group are to supply to one another when performing the review and evaluation. The Delegated Regulation is based on the final report published by ESMA in February 2025.

The RTS on settlement discipline will generally apply from 7 December, except for certain specified provisions which will apply in 2027. The RTS on the review and evaluation process will apply one year after it enters into force.

The European Securities and Markets Authority (ESMA) has published a statement reminding firms to assess whether the new products they offer fall within the scope of existing national product intervention measures on binary options. ESMA's statement responds to the growing popularity of prediction markets—or event contracts— and increasing retail participation globally. ESMA defines "event contracts" as agreements whose financial outcome is binary (a fixed payout or no payout at all) and depends on a yes-or-no answer to a question about a future event. ESMA confirms that not all event contracts are financial instruments, and only event contracts with an event question related to an underlying mentioned in Section C(4) to (10) of Annex I of MiFID II classify as financial instruments. Event contracts qualifying as financial instruments are derivatives and fall within the scope of the temporary product intervention measures on binary options which were initially adopted by ESMA Decision (EU) 2018/7952 and which were subsequently replaced by permanent national product intervention measures mirroring the ESMA temporary measures. As a result, the marketing, distribution or sale of such products to retail clients is prohibited. ESMA reminds firms that product categorisation depends on a product's characteristics rather than its commercial name, and that firms must carefully assess whether the measures apply to the products they offer, while meeting the overarching obligation to act honestly, fairly and professionally in accordance with the best interests of clients. ESMA also reminds firms that providing investment services relating to such instruments requires MiFID II authorisation, even when only distributed to non-retail clients.

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 CP26/24 proposing reforms to streamline consumer investment disclosure requirements across the Markets in Financial Instruments Directive (MiFID), Insurance Distribution Directive (IDD) and non-MiFID investments business. The proposals would align cost disclosure requirements with the Consumer Composite Investments (CCI) regime, which replaced the prescriptive requirements in the Packaged Retail and Insurance-based Investment Products and Undertakings for Collective Investment in Transferable Securities disclosure documents with a new CCI "product summary". The regime allows firms flexibility over how they present information in line with the consumer duty.

Following a review of MiFID derived requirements, the FCA intends to make changes to align Conduct of Business Sourcebook (COBS) disclosure rules with the CCI regime on a conceptual and technical level, and apply the same duty-driven approach, focusing on consumer engagement and understanding.

Proposals include:

• Aligning COBS more closely with the CCI regime and making cost disclosures more consistent throughout the investment journey, so that the pre-sale presentation of product costs aligns with the CCI disclosure framework.
• Removing the MiFID-derived cumulative effect illustration pre-sale and post-sale and instead requiring firms to show how costs have impacted returns in regular post-sale reporting.​

Read more.

The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) (Amendment) Order 2026 was published, accompanied by an explanatory memorandum. The Order expands the remit of the Financial Regulators Complaints Commissioner (FRCC), as set out in the Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) Order 2014, to cover complaints relating to the UK Financial Conduct Authority's (FCA) supervisory functions under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).

Following a 2024 consultation, the Money Laundering and Terrorist Financing (Amendment) Regulations 2026 were made, which widened the information-sharing gateways in the MLRs to enable the FCA to share supervisory information with the FRCC. Due to an oversight in the 2014 Order, the FRCC's remit did not extend to investigating complaints about the FCA's MLR supervisory functions. This Order addresses that omission and corrects minor drafting errors in the 2014 Order. It enters into force on 23 July.

The UK Financial Conduct Authority (FCA) has published final policy statement PS26/14 confirming the final fees and levies for 2026/27 to fund itself, the UK Financial Ombudsman Service (FOS) and certain government departments, following its March consultation. The FCA's annual funding requirement for 2026/27 will be GBP788.9 million, although GBP72.4m of retained financial penalty income from 2025/26 will be offset against fees, reducing the total amount payable by firms to GBP716.5m, a 0.7% increase from the previous year.

The FCA has largely finalised its proposals as consulted on, including a 1% increase to application, transaction and notification fees, continued staged increases to minimum fees in the A and consumer credit fee-blocks, and updated periodic fee rates reflecting changes in the data used to calculate them.

The policy statement also confirms the 2026/27 FOS compulsory jurisdiction levy of GBP86m, the levy rates collected on behalf of government departments, and amendments to the FCA's FEES guidance to clarify that direct debit is the preferred method of payment. The FCA also confirmed that it will respond separately on cryptoasset application fees, with final rules expected in its September Handbook Notice.

The European Banking Authority (EBA) has published a report with the results of a targeted peer review assessing how competent authorities supervise compliance with the Capital Requirements Regulation and Bank Recovery and Resolution Directive Pillar 3 disclosure requirements between June 2023 and June 2025. The EBA found that most authorities had fully or largely integrated Pillar 3 requirements into their supervisory frameworks, with supervisory practices generally operating efficiently and demonstrating a high degree of convergence across the EU. However, the review identified some inconsistencies between jurisdictions, including one authority rated as only partially compliant and another receiving largely "not applied" ratings due to the absence of formal assessment methodologies and processes. The EBA sets out specific individual follow-up measures where deficiencies had been identified, as well as best practices for improvement.

The draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 were published, accompanied by a draft explanatory memorandum. The Regulations support the transition to the FSMA 2000 model of regulation, under which detailed prudential requirements are set by the UK Prudential Regulation Authority within a framework established by government and Parliament. This transition entails the revocation of provisions of the UK Capital Requirements Regulation (UK CRR) and restatements, as needed, in UK legislation to facilitate the FSMA model, with UK CRR provisions replaced with regulator rules, supervisory statements and statements of policy.

The Regulations restate existing UK CRR equivalence provisions in legislation to create a single overseas prudential requirements regime (OPRR), preserving the scope and effect of the current prudential equivalence framework and treating existing equivalence decisions as designations under the new regime. The OPRR enables HM Treasury to designate overseas jurisdictions for specified prudential purposes, with future designations requiring a further statutory instrument and parliamentary approval. In particular, the Regulations provide a framework for designation in the context of: (i) exposures to overseas credit institutions, investment firms and exchanges; (ii) overseas eligible covered bonds; (iii) exposures to overseas central banks, regional governments, local authorities and public sector entities (with specific provision made for those in Gibraltar); and (iv) issuance of capital by overseas intermediate financial holding companies.

The Regulations are expected to enter into force on 1 January 2027.

The European Securities and Markets Authority (ESMA) has published its final report on the simplification of financial transaction reporting under the Markets in Financial Instruments Regulation (MiFIR), the European Market Infrastructure Regulation (EMIR) and the Securities Financing Transactions Regulation (SFTR), together with a factsheet. This follows the interim report published in May which provided a summary of feedback to its June 2025 call for evidence on how to simplify and streamline reporting. 

ESMA recommends a phased reform programme combining short-term burden reduction with a long-term structural reform. At the centre of this strategy is the development of a long-term “report once” model, under which firms would submit data through a single, modular reporting framework capable of serving multiple regulatory and supervisory purposes. This aligns with the “scenario 2a” approach (which evolved from “option 2a” in ESMA’s June 2025 call for evidence). On dual-sided reporting, the final report confirms that a full transition to single-sided reporting was not retained because those data points which are currently reported are used to assess data quality.   

In the shorter term, ESMA proposes a series of simplification measures to provide more immediate burden reduction including streamlining intragroup exemptions, reducing or removing certain reporting fields and reconciliation requirements, simplifying error and omission notifications, and reviewing dual-sided reporting requirements, among other measures mentioned in section 5.2 of the report. ESMA will now engage with EU institutions on the policy recommendations, with implementation requiring legislative amendments and phased development of common reporting standards and infrastructure.

The UK Financial Conduct Authority (FCA) has published a statement announcing that the Upper Tribunal has made an order suspending parts of its motor finance redress scheme while legal challenges brought by several parties are considered. The order was made on terms agreed between the FCA and the challengers, with the partial suspension enabling firms to continue preparing for the scheme while avoiding duplication of work if the challenges succeed. The Tribunal is scheduled to hear the challenges on 14-18 December or 16-26 February 2027. Firms are still expected to comply with all rules that are not suspended and a list of retained scheme rules has been published

Under the suspension, firms are currently not required to calculate, communicate or pay compensation under the scheme timetable; however, they must continue preparatory work, including identifying relevant complaints and gathering data. Firms must also notify complainants who are not entitled to compensation under the scheme within the scheme deadlines, subject to limited exceptions. If a firm requires more time to notify consumers, the FCA will not treat it as non-compliant or take enforcement action as long as consumers are notified within seven weeks of the relevant scheme deadline.

Firms are expected to update complainants to explain when the legal challenge will be heard, what the partial suspension means, and the likely impact on the timetable for dealing with complaints and paying any compensation owed.

The FCA reiterates that it considers the scheme the quickest and fairest route to consumer redress and intends to defend it. If the scheme is ultimately upheld, compensation payments are expected to begin in 2027. If it is overturned, the FCA may instead require firms to resolve complaints through the standard complaints process, which could result in greater involvement from the UK Financial Ombudsman Service. The FCA expects firms to plan for the event of no scheme and to be operationally and financially ready for a complaint-led and supervisory approach to resolve historical liabilities, in line with the default statutory timelines.

In the interim, while the legal challenges are ongoing, the FCA will continue to take a pragmatic approach as previously set out in its May statement.

The Payments Vision Delivery Committee (comprising HM Treasury, the Bank of England, the UK Financial Conduct Authority and the UK Payment Systems Regulator) has published an update on the future retail payments ecosystem to support the Retail Payments Infrastructure Board's consultation on the design of the UK's next-generation retail payments infrastructure. The update outlines a proposed framework for the roles and responsibilities of participants within the future ecosystem, including a central core infrastructure scheme and operator, the product-level arrangements governing specific payment journeys, and supporting commercial, governance and consumer protection frameworks. It emphasises that the future infrastructure should support innovation, competition, interoperability and broad access while maintaining operational resilience and effective safeguards against fraud, money laundering and other financial crime.

The EU Anti-Money Laundering Authority (AMLA) has launched a consultation on draft implementing technical standards (ITS) establishing a common EU-wide format for reporting suspicious transactions and activities under the Anti-Money Laundering Regulation (EU) 2024/1624. Currently, the way suspicions and transaction records are reported differs from one country to another. This makes it harder for companies operating across borders to know what is expected from them, and harder for Financial Intelligence Units (FIUs) to exchange information with each other and with their partners. The proposed ITS would introduce a harmonised set of data points and reporting templates for obliged entities, while allowing for sector-specific reporting requirements, with the aim of improving consistency across member states, reducing reporting complexity for cross-border firms, and enhancing information sharing and processing by FIUs. The deadline for responses is 20 September. A public hearing will be held on 9 September.

The UK Payment Systems Regulator (PSR) has announced that its authorised push payment reimbursement policy is having a positive impact, according to the findings of an independent review. The findings show that payment fraud losses have fallen by GBP73 million per year, APP scam volumes have reduced by approximately 35,000 cases, reimbursement rates have increased from 54% to 65% overall (and to 97% for in-scope claims), and firms with historically higher fraud levels have made the most significant improvements.

The PSR noted that there is no evidence of market exit or significant moral hazard, although some inconsistency in implementation remains across firms. To address this, the PSR has published a roadmap setting out its next steps. The regulator will also consult, before the end of the year, on measures to improve the application of the policy and will continue to monitor evolving fraud risks, including by publishing data on the platforms used by fraudsters to target victims.

The European Securities and Markets Authority (ESMA) has issued a statement clarifying the application of transitional arrangements under the new EU authorisation regime under Regulation 2024/3005 for environmental, social and governance (ESG) rating providers. ESMA's statement seeks to clarify whether third parties publishing or distributing the ESG ratings of existing, but still unauthorised providers, may continue doing so during the period from 2 July to authorisation, so as to avoid disruption during the transition to the new regime.

To this end, ESMA confirms that:

• ESG rating providers other than small providers wishing to continue operating in the EU after 2 July must notify ESMA by 2 August of their intention to apply for authorisation or recognition and shall submit their application for authorisation or recognition by 2 November at the latest.
• Small ESG rating providers wishing to continue operating in the EU must notify ESMA by 2 November of their intention to benefit from the temporary regime for such providers.
• From 2 July, third parties may continue publishing or distributing the ESG ratings of such providers until ESMA has adopted a decision to grant or refuse the application for authorisation or recognition, or to register the notifier as a small ESG rating provider, as relevant. ESMA will publish and update at regular intervals a list of entities that have notified it of their intention to continue operating in the EU after that date.
• After 2 November, third parties cannot publish or distribute the ESG ratings of an ESG rating provider, unless that provider: (i) has submitted an application for authorisation or recognition, or has submitted a notification for registration under the temporary regime for small ESG rating providers; and (ii) is listed in the Article 14 register that will become available on the ESMA website.

This means that after 2 November, third parties publishing or distributing the ESG ratings should consult this register to determine the identities of the ESG rating providers from which they will be able to continue to publish or distribute ESG ratings.

The European Securities and Markets Authority (ESMA) has launched a consultation on technical advice to the European Commission (EC) regarding selected key performance indicators (KPIs) under the Taxonomy Disclosures Delegated Act. The consultation follows the EC's request to the European Supervisory Authorities (ESAs) in March for targeted technical advice to support its review of the Taxonomy Disclosures Delegated Act under Article 8 of the Taxonomy Regulation (EU) 2020/852. The review forms part of the EC's broader Omnibus simplification agenda and aims to reduce reporting burdens while maintaining meaningful sustainability disclosures for investors.

ESMA proposes measures to simplify the EU Taxonomy disclosure framework for non-financial undertakings and asset managers, including changes relating to the operational expenditure KPI and to address concerns about complexity and reporting burden. Feedback is also sought on a potential pragmatic approach to group-level reporting in mixed groups, based on the parent undertaking's reporting model.

In parallel, the European Banking Authority (EBA) published a discussion paper and the European Insurance and Occupational Pensions Authority launched a consultation on matters within their respective remits, including removing the commissions and fees KPI or narrowing to capital markets-related activities, replacing the trading book KPI or narrowing its scope to providing market liquidity, and the underwriting KPI of insurance/reinsurance undertakings.

The deadline for comments on all three papers is 12 August.

The UK Prudential Regulation Authority (PRA) has published a new webpage reminding firms of their obligations under the Depositor Protection Part of the PRA Rulebook regarding the identification, marking and reporting of Financial Services Compensation Scheme (FSCS) protected deposits, following industry queries. The PRA highlights that, under rules 43.1(1) and (2), firms must include in their class A tariff base both covered deposits and the total balance of deposits where the account holder is not absolutely entitled or which constitute safeguarded funds, unless the firm has confirmed that such deposits are not covered deposits.

Where a firm lacks sufficient information to determine eligibility, the PRA expects such deposits to be included. Amounts must be calculated consistently with the single customer view and exclusions view requirements in Chapter 12. The PRA also reminds international branches to reflect these requirements when calculating total potential FSCS liability for branch returns, noting this is a factor in its assessment of branch operations under Supervisory Statement SS5/21. Firms are expected to ensure compliance ahead of year-end reporting for 2026 and to engage with supervisors where necessary.

The European Banking Authority (EBA) has published its final amending product oversight and governance (POG) guidelines for retail banking products, having consulted on them in July 2025. The guidelines make targeted amendments clarifying how firms should address environmental, social and governance (ESG) considerations and greenwashing risks throughout the product lifecycle. The EBA considers the update necessary in light of its June 2024 greenwashing report, which identified growing risks across the financial sector, and to align with recent amendments to the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) on ESG risk management.

Following feedback, the EBA clarifies various provisions and adjusts some of the wording proposed in the consultation, making ESG and greenwashing considerations more explicit within the current requirements where products are offered and sold to consumers. The guidelines adjust only a limited number of existing requirements, relating to the subject matter, the manufacturer's internal control functions, the target market, distribution channels, information for distributors, and information and support for the manufacturer's arrangements.

The EBA also makes consequential updates to reflect wider regulatory developments, including revisions to its Founding Regulation, the internal governance guidelines under the CRD and the sound management of third-party risk regarding non-information communication technology services.

The guidelines are expected to be published in all EU official languages this year and will apply from 11 January 2027. Competent authorities must report whether they comply with the guidelines within two months of the publication of the translations.

The UK Financial Conduct Authority (FCA) has published a package confirming the final policy position for the main aspects of the new UK cryptoasset regime which is coming into effect on 25 October 2027. The rules build on a new licensing regime introduced by the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, which extend the regulatory perimeter to include the activities of issuing qualifying stablecoins, safeguarding cryptoassets, operating a qualifying cryptoasset trading platform, dealing (and arranging deals) in qualifying cryptoassets, and staking.

The package includes five final policy statements and three sets of finalised guidance:

• PS26/9: Admissions & Disclosures and Market Abuse Regime for Cryptoassets.
• PS26/10: Stablecoin Issuance.
• PS26/11: Regulated Cryptoasset Activities.
• PS26/12: Prudential Regime for Cryptoasset Firms, including additional consultations on related guidance on COREPRU and CRYPTOPRU rules.
• PS26/13: Application of the FCA Handbook to Cryptoasset Activities.
• FG26/5: Application of the Consumer Duty to cryptoasset firms.
• FG26/6: Cryptoasset operational resilience.
• FG26/7: Approach to international cryptoasset firms.

For more information on this week's developments, you may wish to read our blog post titled "Final rules for new UK crypto regime".

The Bank of England (BoE) has updated the Digital Securities Sandbox Dashboard to confirm that, going forward, certain stablecoins can be acceptable settlement assets. The change in scope will allow digital securities depositories to settle the cash leg of transactions using approved stablecoins issued in the UK or overseas.

UK-issued stablecoins pegged to any currency will be permitted, as long as: (i) before 25 October 2027, the issuer will have to have demonstrated that they will be able to comply with the incoming requirements for UK issuers of qualifying stablecoins and are registered with the UK Financial Conduct Authority (FCA) for the purposes of the money laundering regime; or (ii) after 25 October 2027, the issuer will need to be authorised to issue a qualifying stablecoin. Overseas issued stablecoins will also be permitted if they are pegged to a non-GBP currency.

To be used as settlement assets in the sandbox, the stablecoins will need to meet minimum requirements which mirror the criteria used for stablecoins in the FCA's regime for UK-issued qualifying stablecoins. The minimum requirements relate to:

• Universal rights of redemption for all holders.
• Backing assets comprised of those required for UK issuers by the FCA's final rules and subject to appropriate risk management in relation to composition and redemption.

Read more.

The UK government has published a bulletin confirming initial insights from the earlier call for evidence on the ownership and control test under UK Financial Sanctions Regulations. The call for evidence sought input on the practical operation of the test and any particular challenges in implementing the requirements.

Feedback provided the UK Office of Financial Sanctions Implementation (OFSI) with a clearer picture of how often questions of hypothetical control are raised in practice. The term hypothetical control refers to the aspect of the control test which asks the person applying the test to consider whether or not the potential controller would, if they so desired, be able (directly or indirectly) to direct the controlled entity's business as they wished. There is no requirement to demonstrate actual exercise of such hypothetical control for this aspect of the test, and it is notoriously difficult to apply in practice as it is a particularly broad and subjective area.

Respondent feedback confirmed that they encountered challenges most frequently under the Russian sanctions regime and highlighted the cost and operational burden in making assessments based on limited information, requiring enhanced due diligence, legal advice, and delaying and/or escalating business decisions. Feedback also noted the limitations on the usefulness of existing tools and guidance which are not necessarily reliable in applying the test in practice.

The bulletin confirms that this area of policy remains under ongoing review, and the government will continue to consider options for providing greater clarity.

The Bank of England (BoE) and the UK Financial Conduct Authority (FCA) have published their joint approach document on the regulation of systemic stablecoin issuers. Under the regime, the FCA will regulate all UK-issued qualifying stablecoins and, in future, their use in payments. However, HM Treasury (HMT) may bring a stablecoin issuer within the joint regulatory framework of the BoE and the FCA by recognising the issuer as systemic. The consultation builds on the BoE's recent proposals in its June publication and the FCA's final stablecoin issuance rules in PS26/10.

For jointly regulated systemic stablecoin issuers, the regulators are splitting supervisory responsibilities across three key areas:

• Areas where the FCA is the lead authority, and where the FCA rules apply—examples include the consumer duty, conduct and the market abuse regime.
• Areas of overlapping responsibility, where both the FCA rules and the BoE's code of practice (which is currently still in draft) apply—examples include operational resilience, record keeping, and issuance, legal claim and redemption.
• Areas where the BoE is the lead authority, and where the BoE's code of practice applies—examples include backing assets, capital and reserve requirements, safeguarding, and failure arrangements. In the case of overlapping responsibilities, the regulators expect to be able to manage these with tools they have experience using, including coordination of supervision and escalation mechanisms.

Read more.

The EU Anti-Money Laundering Authority (AMLA) has issued an advisory note highlighting money laundering and terrorist financing (ML/TF) risks associated with the end of the transitional period under the Markets in Crypto-Assets Regulation (MiCAR). After 1 July, firms must be authorised as MiCAR-compliant crypto-asset service providers (CASPs) to continue providing crypto-asset services in the EU. The note outlines ML/TF risks arising from the end of the transitional period and identifies measures that can be taken by the crypto-asset sector, anti-money laundering and counter-terrorist financing supervisors, and financial intelligence units to ensure a coordinated and risk-based response that protects the integrity of the EU financial system. The note includes a table setting out the relevant risks and the corresponding suggested mitigation measures.

The European Banking Authority (EBA) has published a roadmap setting out how it will deliver its mandates under the revised EU Deposit Guarantee Schemes Directive 2026/804 (DGSD3). The reforms are part of a package seeking to strengthen the EU bank crisis management framework by opening the possibility to use DGS funds in resolution. The EBA will develop 12 regulatory products over the next three years, structured in phased batches, to support implementation of DGSD3 ahead of its application in May 2028. These relate to matters such as:

• Improving depositor information.
• Ensuring faster repayment in both domestic and cross border bank failures.
• The calculation of DGS funds and contributions, and the process to reach the target level.
• Conditions when the cap on contributions of DGS funds to resolution can be lifted.
• Enhancing cooperation between national deposit guarantee schemes and authorities.
• Strengthening stress testing frameworks to ensure crisis preparedness.
• Conditions for the use of DGS in preventative measures.

The European Banking Authority (EBA) has published its 2025 report on supervisory convergence highlighting ongoing progress in aligning supervisory practices across the EU. The report forms part of the EBA's mandate under its Founding Regulation to enhance supervisory convergence across the internal market, and covers prudential supervision, resolution, consumer protection, digital finance and anti-money laundering and countering the financing of terrorism (AML/CTF) supervision. While progress was made in 2025, the EBA identified a number of gaps and challenges, particularly through its European Supervisory Examination Programme.

In prudential supervision, although institutions progressed in transitioning to Basel III under the Capital Requirements Regulation (CRR3), challenges remain in data quality and interpretation of new requirements. Separately, divergences were identified in P2R, particularly for concentration and interest rate risks, while P2G methodologies showed improving alignment yet remained uneven across jurisdictions.

In digital operational resilience, gaps persist in third party risk governance and automation of controls.

In resolution, challenges continue in the operational ability to deliver valuation data within short timelines, documentation completeness, governance and data-quality assurance, as well as the operationalisation and mobilisation of liquidity and collateral.

The report also highlights ongoing weaknesses in AML/CTF supervision and coordination, risks arising under MiCAR and gaps in the integration of ESG risks into supervisory frameworks.

Looking ahead, the EBA will focus on implementing Basel III reforms, advancing resolution testing frameworks, and strengthening supervision under DORA and MiCAR.

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/23 on the changes to the scope and proportionality of the consumer duty. This follows recent developments in response to calls for clarity on the application of the duty in the context of wholesale markets and complex distribution chains, and the FCA's commitment to address these concerns. For further background on this, you may be interested in our webinar titled "Ahead of the Curve: Consumer duty" is the future brighter for wholesale firms?.

The proposals relate to the FCA rules and guidance, including non-handbook guidance. The key proposed changes are as follows:

• Application of the duty limited to retail market business with UK customers. This would amend the current approach where the duty is applied in accordance with sector-specific conduct rules, meaning that if those sector-specific conduct rules apply to cross-border services, so does the duty. The proposal seeks to reduce complexity and cost in potentially applying overlapping regimes for cross-border activity. Note, however, that certain exclusions apply, for example in relation to Crown servants living overseas, pre-paid UK funeral plans and regulated or ancillary activities for UK pensions.
• Clearer delineation of six key concepts which are used by firms to work out how the duty is meant to apply, those concepts being: (i) retail market business; (ii) relevant exclusions depending on the nature of the business; (iii) product definition; (iv) distribution chain; (v) specific disapplication depending on the firm's role; and (vi) material influence.

Read more.

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.

Read more.

The European Banking Authority (EBA) has published a consultation paper setting out a draft methodology for the imposition of fines under the Markets in Crypto-Assets Regulation (MiCAR). The proposed framework is intended to ensure that fines imposed on issuers of significant asset-referenced tokens (ARTs) and e-money tokens (EMTs) are consistent, proportionate and transparent, and support effective compliance with the regime. Under MiCAR, the EBA is responsible for supervising issuers of tokens designated as significant, and the draft methodology outlines how fines may be calculated where infringements are committed negligently or intentionally by issuers or members of their management bodies. The deadline for comments is 28 September, with a public hearing scheduled for 16 July.

Separately, the European Commission has announced it has extended the deadline for input to its consultation on EU crypto-asset rules by one month to 30 September.

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.

Read more.

The European Central Bank (ECB) has announced a comprehensive review and streamlining of its supervisory guidance as part of a broader reform of European banking supervision. The review covers approximately 130 supervisory publications (including guides, reports, letters and methodologies). Around 40 documents have been discontinued as outdated, superseded or no longer relevant, although the texts will remain accessible for transparency and archival purposes. A list of these publications has been published.

Other publications will be subject to either limited or more substantive revisions. Publications with limited revisions include:

• Clarification of supervisory expectations on the management buffer in the guide to the internal capital adequacy assessment process (ICAAP), emphasising that it reflects a bank's own assessment and is not a supervisory requirement (with the revised guide to be published shortly).
• Removal of supervisory expectations on the credit conversion factor from the guide to internal models pending European Banking Authority (EBA) guidelines on this topic.
• Removal of references to credit valuation adjustment in the guide on assessment methodology and the guide on materiality assessment, to reflect changes under the revised Capital Requirements Regulation (CRR III).

Publications subject to more in-depth revisions, to reflect legislative developments and stakeholder feedback, include updates to guidance on licence applications (expected in Q3), risk data aggregation and reporting (expected in Q4), on-site inspections and internal model investigations (expected by year-end), as well as a review of guidance on leveraged transactions (expected by year-end). In addition, the draft guide on governance and risk culture will be replaced with a report focused on good practices, which is expected in Q1 2027. Public consultations will be launched where substantial changes are needed.

The ECB has also updated the classification of its supervisory publications on its website to clarify the purpose and intended use of different publication types, and ensure consistency across publications and alignment with the EU legal framework.

The European Banking Authority (EBA) has published its final revised guidelines for the supervisory review and evaluation process (SREP) and supervisory stress testing, mandated under the Capital Requirements Directive (CRD). The SREP is the core supervisory process that consolidates findings from all supervisory activities into a comprehensive assessment of an institution. Following consultation, the guidelines consolidate all relevant SREP provisions into a single, comprehensive framework as part of the EBA's efforts to simplify and enhance the EU supervisory framework. The update integrates new elements, including environmental, social and governance factors, operational resilience, third-country branches and clarifications on the interaction between the revised Pillar 1 and Pillar 2 capital requirements, including the output floor.

The guidelines also align with the interest rate risks for the banking book and credit spread risk arising from non-trading book activities package and incorporate ICT risk assessment into the main SREP framework. Other updates include improved proportionality, sequencing, and supervisory effectiveness, with a clearer link between supervisory measures and assessment areas. The revised guidelines will replace the existing SREP Guidelines and the Guidelines on ICT risk assessment under the SREP, with application from 1 January 2027. They will be translated into all the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations.

The Bank of England (BoE) has published the Retail Payments Infrastructure Board (RPIB) consultation on the design of the UK's future "next‑generation" retail payments infrastructure, building on the government's National Payments Vision and the Payments Vision Delivery Committee (PVDC) strategy.

The consultation focuses on the core clearing and messaging infrastructure needed for the design's blueprint and does not intend to prescribe user-facing products or services. The consultation is structured around three areas, each of which will be considered alongside each other: (i) the future payment journeys the infrastructure should enable and support, including new payment methods such as account-to-account payments at the point of sale and enhanced cross-border payments; (ii) the design principles that should guide its development; and (iii) the role of the core infrastructure within the wider payments ecosystem. The BoE notes that success will also depend on progress in two related areas: (i) ecosystem roles and responsibilities for participants; and (ii) the development of successful products and services, including priority use cases identified in the PVDC strategy (such as account-to-account payments at the point of sale).

The design process is intended to be closely coordinated with wider reforms by HM Treasury and the UK Financial Conduct Authority, to modernise payments regulation. The consultation also includes an indicative roadmap, setting out how design and implementation could be sequenced.

The BoE further highlights that the new infrastructure should support interoperability across different forms of digital money (including the potential future of the digital pound). The deadline for comments is 11 September. Feedback will help the RPIB identify areas where further analysis, testing or industry engagement is needed, including through new engagement forums. Thereafter, the RPIB will publish a summary of responses and outline next steps in the high-level design phase, which will be taken forward by the new delivery company later this year.

The Financial Services and Markets Act 2023 (Commencement No. 15 and Saving and Transitional Provisions) Regulations 2026 were made and published. The Regulations form part of the phased implementation of the Financial Services and Markets Act 2023 (FSMA 2023) with respect to the revocation of assimilated law (the body of EU law retained at the point of Brexit).

In particular, from 1 January 2027, the Regulations revoke Articles 81(1)(a)(iii), 82(a)(iii), 107(3) and (4), 114(7), 115(4), 116(5), 382(4)(b), 391 and 497 of the Capital Requirements Regulation (Regulation 575/2013) (CRR), that relate to existing equivalence regimes which are being replaced by the new UK overseas prudential requirements regime. Related legislation, specifically Regulation 11(5)(e) of the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 and Implementing Decision 2014/908, which contains equivalence decisions relating to Articles 107(4), 114(7), 115(4), 116(5) and 142(2) of the UK CRR are also being revoked. The Regulations also amend earlier commencement regulations to remove the CRR Equivalence Directions 2020 from an existing saving provision and introduce saving and transitional provisions to preserve the treatment of central counterparties (CCPs) as qualifying CCPs (QCCPs) under Article 497 the CRR. This is to ensure continuity of treatment for recognised CCPs and those seeking recognition under the European Market Infrastructure Regulation, during the transition to the new regime.

The Digital Regulation Cooperation Forum (DRCF) has issued a call for input under its Thematic Innovation Hub on the theme of "authentication and trust", exploring how regulators can help innovators achieve public trust in new technologies and systems. The Hub enables regulators to better understand emerging risks and opportunities and to engage earlier with innovators developing complex new technologies.  The call focuses on the opportunities and challenges associated with two key sub-themes: (i) digital verification, including where these services may support or intersect with open finance and wider smart data frameworks. The DRCF makes clear that this term refers solely to private-sector use cases and focuses exclusively on the verification of identity attributes, rather than the government's ongoing work on digital identity; and (ii) synthetic media and deepfakes, including AI-generated content that may pose risks to authentication, consumer trust and intellectual property rights. Responses are intended to merely inform the DRCF's future cross-regulatory work, and the DRCF does not intend to provide advice or guidance in response to questions raised through the call for input. The deadline for input is 14 August. The DRCF may engage further with respondents through webinars and/or roundtables.

The Council of the EU has announced that it has agreed its negotiating mandate on proposed reforms to the Sustainable Finance Disclosure Regulation (EU) 2019/2088 (SFDR) — known as the SFDR 2.0 proposal, adopted in November 2025. The SFDR requires market participants to disclose how they integrate social, environmental and governance sustainability risks and adverse impacts into their investment offers. The reforms aim to simplify the sustainability-related transparency requirements, reduce administrative burdens, and improve the comparability of financial products for investors.

Overall, the Council supports the proposed changes which include the introduction of three new product categories—"sustainable", "transition", and "ESG basics", to replace the current framework and address concerns around existing concepts that have led to greenwashing. However, its negotiating mandate also introduces the following amendments:

• For products classified as "sustainable" or "transition", firms disclosing principal adverse impacts will have to use at least three prescribed indicators (to be set by the European Commission) to support claims and improve cross-product comparability.
• Investments in fossil fuel companies may qualify as transition investments where 20% of capital expenditure is aligned with EU taxonomy (green classification) rules and the company has a clear, time-bound emissions reduction strategy; such investments will be subject to a fourth mandatory adverse impact indicator.
• General-purpose issuances by EU public sector bodies may be included in the "transition" category under certain conditions.
• Alternative investment funds marketed exclusively to professional investors may be exempt from applying the categorisation provisions.

The Council's mandate will form the basis for negotiations with the European Parliament once it has adopted its own respective position.

The UK Financial Conduct Authority (FCA) has published an updated webpage providing information for firms on motor finance complaints in the context of the ongoing legal challenge to the redress scheme. The FCA notes that there remains uncertainty regarding the scheme's requirements while the legal proceedings are ongoing. The FCA is engaging with the Tribunal and the parties involved in the legal challenge on the possibility of suspending certain elements of the scheme. Firms are reminded to continue carrying out work that can be undertaken now and will be required in all circumstances.

But otherwise, it will take a pragmatic approach and, for the time being, will not require firms to communicate with customers or make payments in accordance with the scheme timetable. Neither will it enforce compliance with the requirement to submit monthly reports. The FCA will keep the position under review as the Tribunal timetable becomes clearer and will engage with lenders and consumer groups on whether further customer communications, scheme preparation measures or contingency planning guidance may be appropriate.

The Financial Action Task force (FATF) has launched a consultation on draft guidance to support the implementation of its revised Recommendation 16 (Wire transfers) on payment transparency. The Recommendation is commonly referred to as the "Travel Rule" and was updated in June 2025. The proposed guidance aims to reflect developments in the payments landscape and to strengthen the security of cross-border payments by increasing the transparency of information accompanying transfers and introducing measures to address fraud and errors. Feedback is sought on a range of issues, including:

• Detecting and preventing misdirected payments, including by leveraging the three options for alignment checks foreseen in the revised Standard.
• Implementation that supports financial inclusion, including in lower-capacity jurisdictions.
• How Recommendation 16 applies to newer payment methods, such as digital wallets and mobile money.
• Implementing Recommendation 16 and meeting data protection and privacy requirements together.

The deadline for responses is 21 August, with the final guidance intended to assist jurisdictions and firms in meeting the revised standards by the end of 2030. The full list of consultation questions is set out in the explanatory memorandum to the draft guidance.

The U.S. Office of Foreign Assets Control (OFAC) and the UK Office of Financial Sanctions Implementation (OFSI) have published joint guidance providing a comparative overview of their respective economic sanctions frameworks. The guidance highlights key similarities and differences across terminology and structure in areas such as sanctions lists, licensing, recordkeeping and reporting requirements. The aim of the guidance is to help private sector firms understand and comply with their obligations under both regimes. The OFSI published a blog, on the same day, to announce the publication and detail its shared objectives with OFAC.

The European Securities and Markets Authority (ESMA) has issued a public statement clarifying its expectations ahead of the end of the transitional period on 1 July for authorisation under the Markets in Crypto-Assets Regulation (MiCAR). ESMA calls on crypto-asset service providers (CASPs) that are not MiCAR-authorised to cease operations and implement an orderly wind down of their EU activities while safeguarding client interests. ESMA expects unauthorised CASPs to:

• Immediately stop onboarding new EU clients, opening new client relationships or accounts, and carrying out marketing or solicitation activities.
• Limit the provision of services to those necessary to sell or transfer crypto-assets, reallocate assets, or close positions, and custody arrangements for a period strictly required to support an orderly exit.

Read more.

The European Banking Authority (EBA) has published its final report with draft implementing technical standards (ITS) amending the Pillar 3 disclosure framework to finalise the implementation of the disclosure requirements introduced under the revised Capital Requirements Regulation (CRR3). This follows the May 2025 consultation. The ITS revise disclosures on environmental, social and governance (ESG)-related risks and introduce new requirements on equity exposures and aggregate exposures to shadow banking entities. The intention is to improve clarity, consistency and usability within the EU's broader simplification agenda. The final draft ITS are closely linked to the ESG supervisory reporting framework set out in the related consultation paper and are advised to be read together.

In relation to ESG disclosures, and in line with the CRR3 mandate, the ITS extend the scope of application beyond large listed institutions to include large non-listed institutions, other institutions, small and non-complex institutions (SNCIs) and large subsidiaries. The framework introduces a more proportionate and streamlined approach, with differentiated disclosure requirements based on institutions size and complexity. In particular, SNCIs are required to disclose only essential information (including on physical and transition risks and exposures to fossil fuel sectors), while the requirements for larger institutions are clarified and streamlined rather than expanded.

The ITS also take into account existing supervisory guidance and seek to enhance consistency across frameworks, including through alignment of terminology and instructions which can be found in the press-release.

The draft ITS will be submitted to the European Commission for adoption. They are expected to apply from a reference date of 31 December 2026, with a later application date of 31 December 2027 for SNCIs. The instructions to the templates will not be published in the Official Journal, but will be published on the EBA website, and disclosures should be provided in accordance with those instructions. They will be available in all languages and shall remain directly applicable in all Member States as part of the ITS.

The Bank of England (BoE) has published a final policy statement setting out its regulatory framework for sterling-denominated systemic stablecoins, alongside a consultation on the draft code of practice for issuers. This follows the November 2025 consultation.

Under the regime, which will be established through amendments made by the Financial Services and Markets Act 2023 to the Banking Act 2009, the UK Financial Conduct Authority (FCA) will regulate the issuance, custody and admission to trading of UK-issued qualifying stablecoins and, in due course, their use in payments, while systemic stablecoins recognised by HM Treasury will be regulated jointly by the BoE and the FCA.

Following consultation feedback, the BoE has made several changes to the final policy. Key changes include:

• Revising the backing asset composition from a 60/40 to a 70/30 split between short‑term UK government debt and unremunerated central bank deposits (overnight repo and reverse repo transactions using eligible government securities with a residual maturity of six months will be permitted).
• Replacing proposed holding limits with a temporary GBP40 billion issuance "guardrail", which the BoE considers significantly less complex to implement.

Read more.

The Bank of England (BoE), together with Bafin, the Bundesbank, the Commodity Futures Trading Commission and the European Securities and Markets Authority (ESMA), have published a summary report with key findings from the 2025 CCP Global International Default Simulation (CIDS) exercise. The "fire drill" exercise involved 38 central counterparties (CCPs), together with their members, involving the simulation of the default of a hypothetical common clearing member across a wide range of asset classes. This included commodities, equities, interest rate swaps, credit default swaps and foreign exchange. It was the largest CIDS exercise to date and was coordinated by CCP Global, an industry body representing CCPs globally.

The exercise demonstrated that CCPs and clearing members are broadly capable of executing default management procedures concurrently across multiple CCPs. However operational pressures—particularly resource constraints, competing priorities, and limited availability of experienced personnel—were evident. Feedback also highlighted the need for greater standardisation of communication, auction processes and file formats across CCPs, as well as improved use of portal-based systems to reduce operational risks.

In a press-release published on the same day, ESMA listed the areas from the findings where further progress is expected ahead of the next iteration, including:

• Encouraging industry-led progress to reduce fragmentation in procedures and communication conventions employed by CCPs, and promote greater use of portal-based solutions.

Read more.

The Bank of England (BoE) has announced the scenario phase of its second system wide exploratory scenario (SWES), this time focused on private markets. The BoE has issued participants with a hypothetical stress scenario that details a severe, but plausible, global macro-economic recession over a five-year period. The severity of this shock has been calibrated to represent a tail-risk outcome for the global economy and is broadly consistent with the severity of other stress tests run, such as the bank capital stress test. The exercise aims to assess whether vulnerabilities in private markets could have systemic implications and under what conditions. Conducted in two rounds, participants will model the impact of the scenario and their behavioural responses.

The exercise will examine vulnerabilities including leverage, valuation opacity, liquidity pressures, interconnectedness and deteriorating credit quality, as well as systemic transmission channels through which stress could spread to markets, institutions and the real economy. Following round 1, the BoE will provide aggregated feedback, allowing firms to update their responses. Initial findings will be published in the July Financial Stability Report, with interim results expected later in the year and a final report expected in 2027. A new webpage detailing the hypothetical scenarios to be used in the SWES was published on the same day.

The UK Prudential Regulation Authority (PRA) has published consultation paper CP9/26, setting out proposed adjustments to the Basel 3.1 internal model approach (IMA) for market risk. The Basel 3.1 standards introduce a comprehensive set of amendments to the market risk framework, commonly referred to as the fundamental review of the trading book (FRTB), with implementation deferred to 1 January 2028. As part of its ongoing monitoring of FRTB implementation, the PRA has identified several areas where targeted adjustments could improve the proportionality and operational effectiveness of the framework, while maintaining robust prudential standards.

Key proposals include:

• Extending the profit and loss attribution test monitoring period from one year to three years.
• Adjusting elements of the risk factor eligibility test (RFET).
• Introducing targeted adjustments and operational simplifications to the non modellable risk factors framework, a new feature of the Basel standards linked to the RFET.
• Reducing barriers to gradual IMA approval by adjusting calculations for firms who use a mix of the IMA and standardised approaches, preventing a scenario where capital requirements could rise as firms move gradually on to IMA.
• Implementing operational simplifications to the treatment of collective investment undertakings.
• Making other minor adjustments and clarifications to the IMA framework.
• Updating reporting and disclosure requirements to align with the proposals above.

The deadline for responses is 18 September. The PRA proposes that the implementation date for the IMA, including the changes resulting from this consultation, will remain 1 January 2028. No other changes are being proposed and all other rules come into force in January 2027, as previously planned.

HM Treasury (HMT) has published its consultation response on the reform of the UK's anti-money laundering and counter-terrorist financing (AML/CTF) supervisory regime for professional services firms. This follows the decision announced last October that the UK Financial Conduct Authority (FCA) will be the sole AML supervisor for legal service providers, accountancy service providers and trust and company service providers under the Money Laundering Regulations 2017 (MLRs). A consultation, published in November 2025, set out the proposed key responsibilities and duties for the FCA's expanded role, along with the legislative changes needed to implement these reforms.

The consultation response includes the policy decisions on these proposals, including:

• Registration and gatekeeping. Making the FCA responsible for registering professional services firms carrying out AML/CTF regulated activity and for maintaining a public register of those firms. The FCA will also be given an explicit power to cancel a firm's registration where it is no longer carrying out regulated activity. In addition, the application of regulation 58 "fit and proper" requirements, enabling supervisors to assess the integrity, competence and compliance history of firms and their beneficial owners, officers and managers, will be extended across legal and accountancy service providers, aligning these sectors with trust and company service providers, which are already within scope.

Read more.