The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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Council of EU agrees position on move to T+1
7 May 2025
The Council of the European Union has approved its position on the European Commission's (EC) proposal regarding a shorter settlement cycle, shortening the settlement period for transactions in transferable securities from two business days (T+2) to one business day after the trade date (T+1). The Council also amended the original proposal to provide for an exemption for securities financing transactions (SFTs) from the T+1 settlement cycle requirement due to their non-standardised nature and settlement periods. To prevent circumvention of the T+1 requirement, the exemption only applies if SFTs are documented as single transactions with two linked operations. Following this approval, trilogue negotiations with the European Parliament will begin. Once agreed, the new rules will apply from 11 October 2027. -
European Parliament plenary adopts amendments to Benchmarks Regulation
6 May 2025
The European Parliament has confirmed it has adopted the regulation amending the Benchmark Regulation (for background, please see our update). The regulation will apply to benchmarks defined as critical or significant, include certain commodity benchmarks, and EU Paris-aligned benchmarks and EU Climate Transition benchmarks. Other benchmarks which reach the EUR20 billion threshold will be subject to a voluntary supervision regime, which aims to promote the use of common standards for climate-related benchmarks. The regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union and will apply from 1 January 2026.Topic : Financial Market Infrastructure -
ECON draft amendments to CSDR for move to T+1
2 May 2025
The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published a report proposing amendments to the European Commission's proposal to amend Regulation (EU) No 909/2014 (CSDR) as regards shortening the securities settlement cycle in the EU from T+2 to T+1. The ECON amendments seek to address potential liquidity risks and the feasibility of further shortening to the cycle to T+0 which some jurisdictions have already adopted. The ECON proposal includes amendments in relation to an exemption for securities financing transactions as defined in Regulation (EU) 2015/2365 (SFTR) given the non-standardised nature of this specific type of transaction. Please also see above on the approval of the Council's position regarding the move to T+1 which also includes amendments to provide for an exemption for securities financing transactions. -
ESMA report on the quality and use of data
30 April 2025
The European Securities and Markets Authority (ESMA) has published its 2024 report, along with a press release, on the quality and use of data, showcasing significant increase in data use by authorities. The report covers datasets from the European Market Infrastructure Regulation (648/2012) (EMIR), the Securities Financing Transactions Regulation ((EU) 2015/2365) (SFTR), the Markets in Financial Instruments Regulation (600/2014) (MiFIR), the Securitisation Regulation (2017/2402/EU), the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) and the Money Market Funds Regulation ((EU) 2017/1131) (MMF Regulation). This edition also expands the scope to include the European Single Electronic Format (ESEF) data and short-selling data. The report is divided into different sections.
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IOSCO – CPMI report assessing EU implementation of Principles for Financial Market Infrastructures
28 April 2025
The International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI) has published a report, alongside a press release, evaluating the EU's implementation of the Principles for Financial Market Infrastructures (PFMI) for systemically important payment systems (PSs), central securities depositories (CSDs) and securities settlement systems (SSSs), collectively referred to as "financial market infrastructures" (FMIs). The report sets out conclusions using a level 2 peer assessment to determine whether, and to what degree, the contents of the EU's legal, regulatory and oversight framework are complete and consistent with the PFMI. Due to the distinct regulatory frameworks for PSs in the euro area and Sweden, which differ from the EU-wide regime for CSDs/SSSs, they were assessed individually. The report concludes that the EU's legal, regulatory and oversight frameworks are complete and consistent with the PFMI in most aspects for PSs, although identified areas for improvement, particularly in risk and governance principles relating to CSDs and SSSs. The assessment reflects the status of implementation as of 30 October 2019, although Annex C to the report discusses the EU's amendments to the CSR Regulation (CSDR Refit) and concludes that this leads to an even greater consistency of the EU regulatory framework with the PFMI and will help authorities address some of the gaps identified in this assessment. -
Key elements of the 2025 CCP Stress Test
25 April 2025
The Bank of England (BoE) has published key elements to its 2025 Stress Test of UK Central Counterparties (CCPs), along with a spreadsheet containing the relevant market stress scenarios. This exercise, the fourth of its kind, aims to assess the financial resilience of UK CCPs by simulating severe market stress scenarios, including the default of two or more of its members. The test will be centred on a bespoke baseline stress scenario, which is an extreme but plausible hypothetical scenario, equivalent to a one-in-3,500 event. It will also include three additional 'multiplier' scenarios for sensitivity and reverse stress testing purposes and will further consider the impact on the wider financial system via initial margin and variation margin calls. This year's exercise will not include a full liquidity stress test but will explore and assess liquidity risks with firms in a more qualitative manner. The BoE will also be exploring a wider range of hypothetical scenarios, including more extreme scenarios and those that break historic correlations, and will use its own independent 'desk-based' modelling to undertake the revaluation of clearing member and client positions in these scenarios. CCPs must submit the necessary data for the 2025 Stress Test to the BoE using data templates and instructions provided privately to them. The results, which will be published in Q4 2025, will support and inform the BoE's supervisory and regulatory activities to address potential areas of risk.Topic : Financial Market Infrastructure -
EC launches targeted consultation on barriers to EU capital markets integration
15 April 2025
The European Commission (EC) has published its targeted consultation on the integration of EU capital markets under its savings and investments union (SIU) strategy, accompanied by a press release and updated webpage. The consultation seeks feedback on issues and possible measures to address: (i) barriers to the integration and modernisation of trading and post-trading infrastructures, the distribution of funds across the EU and efficient cross-border operations of asset management; and (ii) barriers specifically linked to supervision, with respondents invited to indicate any areas in which regulatory simplification would be appropriate in line with the simplification Communication. The questions have been split into six key topics: (i) simplification and burden reduction; (ii) trading; (iii) post trading; (iv) horizontal barriers to trading and post-trading infrastructures; (v) asset management and funds; and (vi) supervision. The consultation is a crucial step in the implementation of the SIU, with insights that are collected helping shape measures to be presented in a comprehensive package in the fourth quarter of 2025. The deadline for responses is 10 June. -
UK 2025 Regulatory Initiatives Grid published
14 April 2025
The Financial Services Regulatory Initiatives Forum (the Forum) has published the Regulatory Initiatives Forum Grid (the Grid), with the UK Financial Conduct Authority (FCA) also updating its webpage. The previous Grid was due to be published in May 2024 but was postponed due to the General Election, meaning the Forum published only an interim update in October 2024.
The 2025 Grid sets out the regulatory pipeline for the next 24 months and reflects the reprioritisation that has taken place since the new government came into power. Notable initiatives include:- motor finance commission review: the FCA intends to confirm, within six weeks of the Supreme Court's decision on past use of discretionary commission arrangements by motor finance firms, whether it will propose a redress scheme;
- liquidity risk management in funds: the FCA will consult on refined proposals regarding liquidity risk management in funds to implement FSB and IOSCO guidelines;
- Consumer Composite Investments (CCI) Regulation: the FCA published a second consultation paper on the new CCI regime on 16 April (see our update) and plans to issue a Policy Statement with final rules in late 2025;
Topics : Client Asset Protection, Conduct and Culture, Consumer / Retail, Financial Crime and Sanctions, Financial Market Infrastructure, FinTech, Fund Regulation, MiFID II, Operational Resilience, Other Developments, Payment Services and Payment Systems, Prudential Regulation, Recovery and Resolution, Securities -
ESMA 2024 CCP peer review report
2 April 2025
The European Securities and Markets Authority (ESMA) has published its 2024 peer review report in respect of central counterparties (CCPs), as required by Regulation (EU) No 648/2012 (EMIR). The focus of the report is supervisory activities related to the EMIR requirements for outsourcing and intragroup governance arrangements. The report covered supervisory activities of all competent authorities of authorised CCPs conducted in 2022 and 2023 and found that for the most part, competent authorities managed CCP colleges compliantly. In terms of the three supervisory expectations specified in the mandate for this peer review, the report concluded the following:- Regarding the notification process for new outsourcing arrangements, most competent authorities met (fully or largely) this expectation with the exception of three authorities which did not require CCPs to have complete written outsourcing agreements in place.
- Regarding the compliance of CCP outsourcing arrangements with EMIR requirements, all competent authorities met this expectation.
- Regarding the compliance with EMIR of CCP governance arrangements in relation to outsourcing, all competent authorities met (fully or largely) this expectation.
The report includes recommendations directed at specific competent authorities in respect of areas identified for improvement. Authorities are expected to address these recommendations within a year from the publication of the report. -
ECB opinion on moving to T+1
1 April 2025
The European Central Bank (ECB) has published its opinion of 31 March on the proposal to shorten the securities settlement cycle from two business days (T+2) to one business day after trading takes place (T+1), by amending the Central Securities Depositories Regulation. The opinion was published in response to requests from the Council of the European Union and the European Parliament. The ECB confirms that it welcomes the proposed move to T+1, and notes that moving to T+1 would facilitate the objective of promoting settlement efficiency in the European Union (EU) and ensure the EU was aligned with other global jurisdictions such as the UK which have also moved, or are moving, to a shorter securities settlement cycle. The EU T+1 Industry Taskforce is currently working towards a T+1 go-live date of 11 October 2027. -
European Commission communication on the Savings and Investments Union
19 March 2025
The European Commission has unveiled its strategy for the Savings and Investments Union (SIU), an initiative to improve the way the EU financial system channels savings to productive investments. Alongside the communication, the Commission also published an accompanying press release and questions and answers. A factsheet includes a summary timetable for key proposed measures. In Q2 2027, the Commission will publish a mid-term review of the overall progress in achieving the Savings and Investments Union.
Implementing the SIU requires a range of policy measures, which are grouped under four headings:- Citizens and savings—encouraging and incentivising retail customers to hold more of their savings in capital market instruments.
- Investments and financing—promoting investment in equity and certain alternative assets, namely venture capital, private equity and infrastructure.
- Integration and Scale—removing sources of fragmentation in EU capital markets, whether regulatory, supervisory or political, to allow for the possibility of market-driven consolidation.
- Efficient Supervision in the Single Market—harmonised supervision is an objective of the SIU. All financial market operators should receive the same supervisory treatment irrespective of their location across the Union.
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EU recognition of UK CCPs extended
17 March 2025
Following the extension of EU equivalence for UK CCPs to 30 June 2028 under the EU European Market Infrastructure Regulation (EMIR), on 17 March, the European Securities and Markets Authority (ESMA) announced the extension of the tiering and recognition of the three UK CCPs: ICE Clear Europe, LCH Ltd and LME Clear. The Bank of England published a press release on the same day welcoming ESMA's decision to ensure that EU market participants can continue to access the clearing services of the UK CCPs. In addition, ESMA and the Bank have agreed an amended Memorandum of Understanding governing cooperation and information sharing regarding UK CCPs, which take account of the changes brought in by EMIR 3. -
ESMA publishes overview of planned consultations for 2025
13 March 2025
The European Securities and Markets Authority has published an overview of its planned consultations for 2025. The consultations relate to workstreams under the EU Listing Act, the Markets in Financial Instruments package, the latest European Market Infrastructure Regulation (known as EMIR 3), the review of the Alternative Investment Fund Managers Directive, sustainable finance and investor protection. ESMA states that it will update the list regularly. -
FCA publishes review of liquidity risk management at wholesale trading firms
10 March 2025
The UK Financial Conduct Authority (FCA) has published observations on good and poor liquidity risk management practices from its multi-firm review of wholesale trading (sell-side) firms in scope of the Investment Firms Prudential Regime (IFPR). In recent years, market stress events such as the COVID pandemic, the Russia-Ukraine war, the nickel price spike and the collapse of Credit Suisse and Silicon Valley Bank have prompted liquidity shocks for some firms. The FCA has, since 2023, written to sell-side firms on multiple occasions on the subject of liquidity risk management, noting that some firms were failing to develop their own competence in the area and advising on actions firms should be taking to manage liquidity risk.
The FCA's multi-firm review covered larger sell-side firms that are prudentially supervised by the FCA and compared their approaches on liquidity risk management. The FCA has set out examples of good and poor practices in a range of areas including governance and risk culture, stress preparedness, contingency funding plans and wind-down plans, and liquidity risk management capabilities. In general, the FCA found that many firms had appropriate and proportionate approaches, but some firms were weaker with approaches not proportionate to their size and the instantaneous nature of their liquidity risks. Following its review, the FCA took action against some firms and has confirmed it will continue to give feedback and use other regulatory tools where it finds firms are not properly managing liquidity risks. Firms are encouraged to use the good and poor practices identified in the review to improve their liquidity risk management capabilities. The FCA also plans to organise workshops and roundtables to share its observations.Topic : Financial Market Infrastructure -
FCA invites applications for a bond consolidated tape provider
7 March 2025
The UK Financial Conduct Authority (FCA) has published a tender notice and related tender documents for the appointment of a bond consolidated tape provider (CTP). The tender documents explain the award process and how to participate; the standards and requirements the CTP will need to meet; the licences that the successful bidder will provide to CT users; and the required information that firms must submit as part of the tender process.
Read more.Topic : Financial Market Infrastructure -
ESMA notifies EC of delay of certain deliverables
6 March 2025
The European Securities and Markets Authority (ESMA) has published a letter (dated 3 March) addressed to the European Commission on the prioritisation of ESMA's 2025 deliverables. ESMA's letter sets out specific items which ESMA intends to delay or which have been cancelled. In some instances the delays are made with the purpose of aligning ESMA's work with other initiatives. For example, the technical standards on buy-in under the Central Securities Depository Regulation Review are delayed until T+1 implementation is complete. The EU has committed to moving to T+1 by 11 October 2027. ESMA identifies the following as being included in its highest priority workstreams: (i) implementation of the latest amendments to the European Market Infrastructure Regulation, known as EMIR 3; (ii) the Markets in Financial Instruments Directive and Regulation Review; (iii) the Listing Act; (iv) the Central Securities Depository Regulation Review; (v) the T+1 project; and (vi) the review of the Alternative Investment Fund Managers Directive. ESMA is also prioritising new supervisory responsibilities relating to Consolidated Tape Providers, Green Bond verifiers, ESG Rating providers and oversight powers under the Digital Operational Resilience Act. -
European Securities and Markets Authority consults on changes to settlement discipline under CSDR
13 February 2025
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.Topic : Financial Market Infrastructure -
European Commission legislative proposal for shortened settlement cycle in EU
12 February 2025
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.Topic : Financial Market Infrastructure -
Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025
12 February 2025
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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Topic : Financial Market Infrastructure -
UK Financial Conduct Authority to consult on new short selling rules in Q3 2025
12 February 2025
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.Topic : Financial Market Infrastructure -
European Commission consultation on draft Delegated Regulation amending Delegated Regulation on fees relating to supervision of consolidated tape providers under MiFIR
10 February 2025
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
Read more.Topic : Financial Market Infrastructure -
European Securities and Markets Authority consultations on draft RTS relating to CCP authorisations, extensions and validations under EMIR 3
7 February 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.
Read more.Topic : Financial Market Infrastructure -
UK Financial Conduct Authority updates webpage on bond consolidated tape
7 February 2025
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.Topic : Financial Market Infrastructure -
European Commission consultation on draft Delegated Regulation extending procedural rules for penalties imposed on data reporting service providers to consolidated tape providers under MiFIR
6 February 2025
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.Topic : Financial Market Infrastructure -
UK implementation plan published for T+1 settlement
6 February 2025
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. -
UK Financial Conduct Authority consults on further proposals for firms operating public offer platforms
31 January 2025
The Financial Conduct Authority (FCA) has published a consultation paper (CP25/3) on further proposals to support the implementation and operation of the new public offer platforms (POP) regime. This regime is designed to facilitate companies making public offers of securities to a broad range of investors outside public markets when raising more than GBP5 million. The proposed regime for POPs is part of the new Public Offers and Admissions to Trading Regulations 2024 (POATRs), which were made in January 2024. The POATRs will replace the current UK Prospectus Regulation. CP25/3 aims to ensure a comprehensive set of regulatory requirements are in place for firms operating POPs when the regime comes into force, and to ensure that firms understand the FCA's proposed approach to authorising and supervising firms carrying on this new regulated activity. This consultation was published alongside the FCA's consultation paper on further changes to the public offers and admissions to trading (POAT) regime and the UK Listing Rules (UKLR).
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Commission Implementing Decision extends temporary equivalence of UK CCPs
31 January 2025
Commission Implementing Decision (EU) 2025/215 has been published in the Official Journal of the European Union, extending EU equivalence for UK CCPs under the European Market Infrastructure Regulation (EMIR). The Decision will apply from 1 July 2025 (the day after the EU's current equivalence decision expires, on 30 June 2025) and will expire on 30 June 2028. The European Commission published a press release on the same date, noting that the extension is designed to provide time for the implementation of EMIR 3. -
Financial Services and Markets Act 2023 (Digital Securities Sandbox) (Amendment) Regulations 2025 laid
January 30, 2025
The Financial Services and Markets Act 2023 (Digital Securities Sandbox) (Amendment) Regulations 2025 were laid before parliament, together with an explanatory memorandum. The Regulations relate to the Digital Securities Sandbox, which is a temporary supervisory regime allowing firms to test certain innovative financial market infrastructure activities that launched on September 30, 2024. The Regulations amend the Sandbox by modifying the application of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to Sandbox participants. This is to ensure that firms which may already be registered or authorized with the FCA for other activities need not register separately with the FCA as a cryptoasset business for the purpose of undertaking Sandbox activities. The explanatory memorandum accompanying the Regulations also confirms that a number of firms have successfully completed the approvals process for the Sandbox and passed through Gate 1 (the testing stage). The Regulations make certain other minor amendments, and come into force on March 3, 2025. -
European Commission communication on EU competitiveness compass
January 29, 2025
The European Commission has published a communication on a Competitiveness Compass for the EU, which sets out an action plan in response to the Draghi report published in September 2024. The communication sets out the framework for the Commission's work on competitiveness for the next five years and lists its initial priorities. One of the Commission's key aims is to reduce the regulatory burden, which for the financial services sector will include publishing, in February, the first of a series of Simplification Omnibus packages relating to sustainable finance reporting, sustainability due diligence and the sustainable finance taxonomy. Additionally in Q1 2025 the Commission will set a strategy on a Savings and Investments Union, followed by a set of specific proposals, which will aim to promote low-cost saving and investment products at EU level for retail investors. Longer term work includes removing barriers to consolidation of financial markets infrastructure and taxation barriers to cross-border investment, promoting the EU's securitization market, and pursuing the reform and harmonization of insolvency frameworks in the EU. A tentative agenda for forthcoming College of Commissioners' meetings indicates that the Commission will publish a communication on the Savings and Investments Union on March 19, 2025. -
European Securities and Markets Authority publishes final report and draft Regulatory Technical Standards on colleges for central counterparties under European Market Infrastructure Regulation 3
January 28, 2025
The European Securities and Markets Authority has published its final report containing draft regulatory technical standards relating to colleges for central counterparties under the European Market Infrastructure Regulation 3. The report presents draft amendments to the RTS on colleges for CCPs, to reflect the changes introduced by EMIR 3 on the functioning of CCP colleges. The proposed draft amendments concern the practical arrangements for the functioning of the college with regard to the respective roles of the co-chairs and the interaction between them, the information to be shared with the college and the modalities of communication between college members. ESMA is not conducting an open public consultation on the proposed amendments, as the proposed amendments are limited in scope and only concern competent authorities. ESMA has consulted the European System of Central Banks and other relevant competent authorities, and has also consulted the Securities and Markets Stakeholder Group. ESMA will submit the draft amendments to the European Commission, which will have three months to decide whether to endorse them.Topic : Financial Market Infrastructure -
Global Foreign Exchange Committee publishes amended FX Global Code of Conduct
January 24, 2025
The Global Foreign Exchange Committee (GFXC) has published the updated version of the FX Global Code of Conduct (dated December 2024), which supersedes the previous version (from July 2021). Updates have been made to strengthen the Code's content and guidance on settlement risk, transparency and use of data on electronic trading platforms. The updated Code also includes links to GFXC reports which are published from time to time and while not forming part of the Code, are intended to facilitate wider awareness and understanding of specific aspects of the FX market. The GFXC has also published enhanced disclosure cover sheets for liquidity providers and platforms available via its DCS webpage. The GFXC encourages all market participants to review the amendments to the Code and consider renewing their Statement of Commitment, taking into account the nature and relevance of the updates to their FX market activities. It considers that a 12-month period should be sufficient for those affected by the changes to align their practices with the Code's principles.Topic : Financial Market Infrastructure -
New Designated Publishing Entities regime operational from 3 February
January 24, 2025
The European Securities and Markets Authority has published a press release reminding market participants that from February 3, 2025 the new Designated Publishing Entities regime shall be operational. The DPE regime was introduced following the EU Markets in Financial Instruments Directive/Markets in Financial Instruments Regulation Review and means the responsibility for reporting transactions carried out over-the-counter will turn on whether or not firms hold DPE status. The press release also confirms that ESMA will no longer publish the quarterly systematic internaliser data. From September 2025, ESMA will no longer be required to calculate quarterly SI data and given the imminence of the end of the regime, ESMA has decided stop publishing this data. Accordingly, the mandatory SI regime will no longer apply from February 1, 2025 although firms may continue to opt in to the regime.Topic : Financial Market Infrastructure -
European Commission adopts Delegated Regulation on over-the-counter derivatives identifying reference data under EU Markets in Financial Instruments Regulation
January 24, 2025
The European Commission has adopted a Delegated Regulation supplementing the EU Markets in Financial Instruments Regulation on OTC derivatives identifying reference data to be used for the purposes of the transparency requirements laid down in Article 8a(2) and Articles 10 and 21, following its consultation on the draft text in June 2024. The identifying reference data are to be used from September 1, 2026 for OTC interest rate and OTC credit default swaps. The Delegated Regulation includes an annex which lists identifying reference data for OTC interest rate swaps and separately lists standard business terms for the reference rates referenced in OTC interest rate swaps subject to the MiFIR transparency requirements. The Delegated Regulation will enter into force 20 days after its publication in the Official Journal of the European Union.Topic : Financial Market Infrastructure -
UK Financial Conduct Authority portfolio letter on supervisory strategy for wholesale brokers
January 24, 2025
The U.K. Financial Conduct Authority has published a Dear CEO Letter on its new strategy for supervising wholesale brokers. The FCA has observed a change in the sector in recent years with larger firms acquiring smaller ones and some weaker firms exiting the market altogether, although it observes the sector is overall healthy and competitive.
The FCA notes that improvements have been made on prudential risk management following its focus on the issue over the previous two years and plans to publish an observation paper on good and poor practices shortly. On financial crime, the FCA has seen improvements in areas such as risk assessment processes and oversight frameworks but is concerned that firms are underestimating their money laundering risks. It expects firms to read its publication, Money laundering through the markets, incorporate good practices and stop poor practices where relevant. It continues to observe an inconsistent application of the Remuneration Code across firms and will use regulatory tools (including imposition of capital requirements) for firms it has identified as being at fault.
Read more.Topic : Financial Market Infrastructure -
International bodies report on effective practices for streamlining variation margin in centrally cleared markets
January 15, 2025
The Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions published a final report on examples of effective practices for streamlining variation margin in centrally cleared markets. The report sets out eight effective practices which aim to provide examples of how standards set out in the CPMI-IOSCO Principles for Financial Market Infrastructures, as supplemented by the relevant guidance, can be met.
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International bodies report on streamlining variation margin processes and initial margin responsiveness of margin models in non-centrally cleared markets
January 15, 2025
The Basel Committee on Banking Standards and International Organization of Securities Commissions published a final report on streamlining variation margin processes and initial margin responsiveness of margin models in non-centrally cleared markets. The report follows on from the BCBS-CPMI-IOSCO September 2022 review of margining practices.
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International bodies issue final report on transparency and responsiveness of initial margin in centrally cleared markets
January 15, 2025
The Basel Committee on Banking Standards, Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions has published a final report on transparency and responsiveness of initial margin in centrally cleared markets. The report sets out ten final policy proposals, with the aim of increasing the resilience of the centrally cleared market ecosystem in times of market stress. The proposals are also designed to improve market participants' understanding of centrally cleared initial margin calculations and potential future margin requirements.
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Government response to call for evidence on pension fund clearing exemption
January 10, 2025
HM Treasury published the Government's response to its call for evidence on the pension fund clearing exemption, which exempts pension funds from the requirement to clear certain derivative contracts via a central counterparty. In November 2023, HMT published the call for evidence requesting input from industry stakeholders to inform the Government's review of the exemption, which aimed to determine a long-term approach. The response document provides a breakdown of the key themes raised by the 26 respondents to the call for evidence. Following analysis of the responses and engagement with U.K. regulatory authorities on the issue, the Government has decided that the exemption should be maintained for the longer-term. The Government will now take forward legislation to ensure that the exemption does not expire on June 18, 2025 as currently scheduled, and to remove any further time limit on the exemption. The Government will, however, keep this policy under review in coordination with the U.K. regulatory authorities. -
European Securities and Markets Authority consults on the internal control framework for certain market agencies
December 19, 2024
The European Securities and Markets Authority has published a consultation on draft guidelines on internal controls for benchmark administrators, credit rating agencies, and market transparency infrastructures (which include trade repositories, data reporting services providers, and securitization repositories). The guidelines outline ESMA's expectations for the components and characteristics of an effective internal control system. The proposed guidelines build on the internal control guidelines currently in place for CRAs and extend them to BMAs and MTIs. They also revise ESMA's expectations considering the growing impact of technology on supervised entities' operations, including in terms of managing technology risk from external and internal sources, and the integration of new technologies into supervised entities' internal controls. The draft guidelines also explain in greater detail how ESMA applies proportionality in its expectations regarding the internal controls for a supervised entity. The deadline for comments is March 19, 2025. ESMA expects to publish a final report by Q4 2025.Topic : Financial Market Infrastructure -
Bank of England policy statement and statement of policy on power to direct a CCP to address impediments to resolvability
December 19, 2024
The Bank of England has published a statement of policy setting out its approach to exercising its power to direct a CCP to address impediments to resolvability under the Financial Services and Markets Act 2023. This power applies to U.K.-based CCPs. The BoE also has a new power to direct a parent company of a CCP to establish a separate holding company for specific purposes, if the CCP is a subsidiary of a company incorporated in the U.K.
The policy statement summarizes the feedback received to the BoE's July 2024 consultation on the subject and provides the BoE's responses to the points raised in relation to: (i) the approach to the BoE's use of its power; (ii) the publication of directions; (iii) the approach to the resolvability assessment of CCPs; (iv) engagement with industry and other regulators; (v) the BoE's objectives; and (vi) the approach to CCP resolution publication.
In the policy statement, the BoE confirms that it still intends to publish in due course a document on its general approach to CCP resolution. -
Updated memorandum of understanding on FMI supervision between Bank of England and UK Financial Conduct Authority published
December 19, 2024
The Bank of England has published an updated memorandum of understanding between the BoE and the U.K. Financial Conduct Authority on the supervision of markets and financial market infrastructures. The memorandum sets out a high-level framework the BoE and FCA use to co-operate on the supervision of markets and market infrastructure. The framework also caters for the BoE's obligations under the Banking Act 2009 to consult the FCA on the exercise of its payment system oversight responsibilities. The memorandum has been updated to reflect changes made by the Financial Services and Markets Act 2023, including to reflect the extended rule making powers, the designated activities regime and cooperation in relation to FMI sandboxes. It has been agreed pursuant to section 17A of the FSMA 2000.Topic : Financial Market Infrastructure -
Bank of England policy statement and statement of policy on commercially reasonable payments in a statutory tear up in CCP resolution
December 19, 2024
The Bank of England has published a statement of policy setting out its approach to determining commercially reasonable payments to clearing members whose contracts are subject to a statutory tear up in CCP resolution, together with a policy statement responding to feedback received to the BoE consultation paper on the subject.
Respondents were generally supportive of the proposals in the consultation paper, while recognizing the challenging circumstances in which a statutory tear up may occur. The policy statement summarizes the feedback received and provides the BoE's responses to the points raised in relation to: (i) CCPs' role in proposing prices for torn up contracts; (ii) responsibility for determining a commercially reasonable price; (iii) definition of a commercially reasonable price; (iv) CCPs' incentives when proposing prices; (v) access to pricing information in stressed market conditions; (vi) benefits to the high bar for deviating from CCPs' proposed prices; (vii) determining an alternative price; (viii) scope of a statutory tear up; and (ix) the BoE's approach to CCP resolution.
The BoE statement of policy entered into effect from December 19, 2024. In the policy statement, the BoE confirms that it still intends to publish in due course a document on its approach to CCP resolution. -
Bank of England publishes annual report on the supervision of financial market infrastructures
December 18, 2024
The Bank of England has published its annual report on its supervision of financial market infrastructures, covering the period December 16, 2023 —December 17, 2024. The report sets out the work undertaken by the BoE over the past year in relation to FMIs to deliver its financial stability objective and secondary innovation objective. The report also outlines the BoE's objectives for the coming year.
Read more.Topic : Financial Market Infrastructure -
European Banking Authority publishes no action letter on application of European Market Infrastructure Regulation 3 with respect to initial margin model authorization
December 17, 2024
The European Banking Authority has published a no action letter stating that competent authorities should not prioritize any supervisory or enforcement action in relation to the processing of applications for initial margin (IM) model authorization received as a result of the entry into force of EMIR 3.
EMIR 3 requires that counterparties apply for authorization to their competent authorities before using, or adopting a change to, a model for initial margin calculation. Compliance with this requirement immediately after EMIR 3 enters into force may cause difficulties for competent authorities and counterparties until the EBA has established its central validation function and the draft regulatory technical standards and guidelines setting out key requirements have been published.
The no action letter sets a registration process for counterparties in scope of IM model authorization for any first application submitted after EMIR 3 enters into force and for subsequent changes to such IM models. As per the no action letter, however, competent authorities should not prioritize the processing of such applications, until the draft RTS on Initial Margin Model Validation and the guidelines on application and authorization process mandated under EMIR 3 come into application. -
UK Financial Conduct Authority publishes consultation on the regulatory framework for PISCES
December 17, 2024
The U.K. Financial Conduct Authority has published a consultation on the regulatory framework for the Private Intermittent Securities and Capital Exchange System (PISCES), the proposed new platform for trading shares in private companies. The draft legislation implementing the PISCES sandbox ( the Financial Service and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025 were published in November 2024. The consultation contains the FCA's proposed rules and guidance for the PISCES sandbox, as well as alternative options the FCA considered in its policy development process.
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UK Financial Conduct Authority Dear CEO Letter for benchmark administrators
December 13, 2024
The Financial Conduct Authority has published a Dear CEO Letter setting out its key concerns and priorities over the next two years for benchmark administrators. The FCA's supervisory priorities include:- corporate governance and oversight — the FCA will conduct a governance review in late 2025 to assess how the U.K.-regulated benchmark administrators' business is governed and led by U.K. Approved Persons under the Senior Managers Regime, and to what extent they are able to oversee the full range of risks to which the firm is exposed;
- data quality controls — in early 2025, the FCA will evaluate the adequacy of the due diligence BMAs perform on data providers. Through this multi-firm data controls project, the FCA will seek evidence of how BMAs' control frameworks adequately mitigate the additional risks associated with unregulated or innovative data; and
- benchmarks controls — in H2 2025, the FCA intends to evaluate the adequacy of end to-end benchmark controls. This will involve a multi-firm review, across different asset types, focusing on custom and more complex benchmarks. The FCA will seek evidence that firms have adapted their controls for the launch, calculation, and rebalancing of custom or complex benchmarks.
Topic : Financial Market Infrastructure -
UK Financial Conduct Authority publishes Dear CEO letter for data reporting service providers
December 13, 2024
The U.K. Financial Conduct Authority has published a Dear CEO letter for data reporting services providers. Since its previous letter in May 2022, the FCA has seen improvement in some areas such as within firms' data quality system and controls and more bespoke DRSP documentation. However, there remain risks of harm.
The FCA's ongoing supervisory priorities are:- operational resilience — the FCA has observed a low number of operational resilience-related incidents being reported by DRSPs. While this could reflect strong operational resilience, the FCA is concerned that it may indicate that firms have not set appropriate thresholds for reporting incidents. The FCA will closely monitor reported incidents and work with DRSPs to review the adequacy and compliance of incident management and response procedures;
- data quality systems and controls — the FCA expects DRSPs to prioritize enhancing data quality systems and controls to ensure all reported data is complete, accurate, and submitted on time; and
- communication with the FCA and the notification regime — firms are required to provide prompt and accurate notifications to the FCA. The FCA will undertake a review to assess DRSPs' procedures for submitting notifications, which will focus on ensuring that firms have clearly established and appropriate thresholds for determining when a notification is required.
Topic : Financial Market Infrastructure -
UK Financial Conduct Authority publishes Dear CEO letter for trading venues
December 13, 2024
The U.K. Financial Conduct Authority has published a Dear CEO letter setting out its key concerns and priorities over the next two years for trading venues (that is, recognized investment exchanges, multilateral trading facilities and organized trading facilities).
The FCA's supervisory priorities include:- operational resilience — in the coming period, the FCA will focus on the preparedness of RIEs for the new regulatory framework surrounding operational resilience confirmed by PS21/3. The FCA will also be selecting certain MTFs and OTFs for a further review of their operational resilience;
- market orderliness — the FCA will continue to discuss with trading venues how they are developing the systems and controls they have, to maintain an orderly market in response to the evolving technology and risk landscape, with a focus on volatility management;
Read more.Topic : Financial Market Infrastructure -
UK authorities consult on operational incident and third-party reporting
December 13, 2024
The Financial Conduct Authority, Prudential Regulation Authority, and the Bank of England have launched consultations on operational incident and third-party reporting. The regulators propose to establish a framework to enhance incident and third-party risk management, strengthen firms' operational resilience and minimize harm. To achieve this, the regulators propose a definition for an operational incident and introduce new material third-party reporting rules. The proposals introduce standardized reporting templates to allow the regulators to collect data which would be used to monitor and respond to potential risks arising from operational incidents and firms' increasing reliance on third parties.
The deadline for comments is March 13, 2025. The FCA intends to publish finalized rules in H2 2025. The PRA and the BoE propose that the implementation date for the proposals will be no earlier than H2 2026. You may like to see our client bulletin, "Operational incident reporting: UK financial regulators propose new rules", which goes into the details of these proposals. -
EU provisional agreement on regulation amending the Benchmarks Regulation
December 12, 2024
The Council of the European Union and the European Parliament have reached a provisional agreement on the proposed Regulation amending the Benchmark Regulation. The proposed Regulation will amend the scope of the benchmark rules, the use of benchmarks provided by a third-country administrator, and certain reporting requirements. The Council and EP agreed:- To reduce the regulatory burden on administrators of non-significant benchmarks by removing them from the scope of current rules.
- That only those benchmarks defined as critical or significant, EU Paris-aligned benchmarks, EU Climate Transition benchmarks, and certain commodity benchmarks should remain in scope. In addition, there will be the option for out-of-scope administrators to opt-in voluntarily under certain conditions.
- To add further qualitative criteria to the calculation methodology for significant benchmarks.
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