UK FCA insights on wholesale banks supervision

The UK Financial Conduct Authority (FCA) has published the third edition of its wholesale banks supervision insights. The FCA's earlier learnings from August 2025 and April of this year, now sit under separate webpages which can be found here and here. The insights draw on the FCA's supervisory work, risks it has seen crystallise and findings from internal audit functions. Its findings are summarised under five headings: (i) improving the resilience of firms and markets; (ii) enhancing efficient, competitive and innovative markets; (iii) preventing financial crime and market abuse; (iv) ensuring firms effectively manage conflicts of interest and conduct oversight; and (v) other learnings. Observations include:

• Data management: firms should assess the design and operating effectiveness of data ingestion at the control implementation stage and track clear data lineage from source to consumption. Banks remain responsible for communications recording and monitoring requirements even when they use third parties.
• Algorithmic trading controls: firms enhancing their algorithms should assess the impact of changes across the entire trading process, including whether the change creates unforeseen interactions with execution venues, data or fill notifications. The FCA reminds firms of the regulatory technical standard (RTS) 6 requirements.
• Operational resilience: banks should be able to explain how they have calibrated impact tolerances by reference to the potential market, client and / or counterparty harm and not rely solely on generic recovery time objectives. Firms should also show how incidents, near misses and testing outcomes have informed mapping, vulnerability assessment, remediation priorities and future scenario design. Firms with settlement-related important business services should also consider how the move to T+1 settlement may affect their operations.
• Financial crime prevention: banks' controls should identify the risks associated with funding or servicing firms that are not registered for Annex 1 activities.

The FCA also shares internal audit metrics from seven wholesale bank subsidiaries as a benchmarking reference point. Firms are advised to consider the FCA's observations and how they may apply to their own activities and practices.

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