UK and EU regulatory priorities and timelines for 2026

There are also key regulatory changes expected in relation to market integrity and data, buy-side and retail topics, and digitalisation and DLT. In this article, we explore the upcoming milestones for 2026 and look ahead to see what is coming down the pipeline for the financial markets over the next 12 months.

Capital markets
Primary markets
UK

Most significantly for UK primary markets in 2026, the UK is replacing the onshored EU Prospectus Regulation with a new domestic framework designed to support more flexible capital raising, while maintaining critical investor protections.

The reforms are delivered through the Financial Services and Markets Act 2023, which includes the new designated activities regime, and the Public Offers and Admissions to Trading Regulations 2024 (POATRs), together with new UK Financial Conduct Authority (FCA) rules. The reforms reflect recommendations from the UK Listing Review and the Secondary Capital Raising Review, and the FCA’s aim to make it easier to list and raise capital—making it more attractive for companies to list in the UK.

As a brief reminder of the approach of the incoming regime, the new architecture separates the regulation of public offers from the regulation of admission to trading. The reforms reframe the UK prospectus regime in three fundamental ways: a prohibition‑and‑exceptions model for public offers; greater rule‑making flexibility for the FCA on admission to trading; and targeted recalibration of liability and disclosure to facilitate efficient issuance, including for retail‑facing offerings.

The principal commencement date for the new regime is 19 January 19, 2026, with prospectuses approved by the FCA before that date remaining subject to the current regime. Transitional measures will apply for such prospectuses so they can continue to be used in accordance with their existing validity and the current law. Operationally, then, market participants will be dealing with a dual‑track environment and may need to manage divergence between UK and EU regimes.

Key changes include those in relation to the exceptions to the general prohibition in the POATRs on public offers in the UK, which are similar to those under the current regime (including offers to qualified investors and offers to fewer than 150 persons other than qualified investors) but go broader. There is also, notably, a change in the threshold for secondary capital raising as, under the new rules, the threshold at which a prospectus may be required for secondary issues is being raised from 20% to 75%. 

The regime also introduces the concept of a public offer platform to provide a controlled route for certain public offers of non‑transferable securities, addressing past regulatory gaps while preserving appropriate avenues for retail access. The reforms also address long‑standing obstacles to retail participation, permitting alleviations for plain‑vanilla listed bonds and allowing lower denomination issuance where appropriate safeguards exist, while closing loopholes for non-transferable securities. 

Looking further ahead, post-January, while the FCA has not specified additional milestones where further guidance may be issued, there may be refinements as the FCA monitors market outcomes. One such example is the challenge faced by utility company issuers, many of which are unable to meet the criteria for plain-vanilla listed bonds because their bonds are not issued by an issuer (or subsidiary) in the equity shares (commercial companies) listing category, which is a requirement for the retail access regime to apply. 

In terms of the broader picture, the new regime aims to contribute to the UK’s attempts to ease regulatory red tape and support retail investment—both of which are key themes throughout all the sectors covered by this report. However, as noted elsewhere, both these aims may bring into play various risks. For anyone following the implementation of the UK regime (and the areas of divergence from the EU version), it will be interesting to observe the extent of the impact in terms of opening the markets to retail investors and how institutional and sell-side market participants adapt.

For further detail on the impact of these changes and EU divergence, focussing on debt capital markets, please see our article here.

EU

On the EU side, 2026 will see the main changes introduced by the EU Listing Act package come into force. The package included three measures: a Listing Act directive (which, among other things, repealed the Consolidated Admissions and Reporting Directive); a directive making changes in relation to multiple-vote share structures; and a Listing Act regulation which amended the Prospectus Regulation, the Market Abuse Regulation and the Markets in Financial Instruments Regulation.

Certain changes entered into force straight away in 2024, but over the next year there will be further tranches of rules coming into force: those set to apply after a 15-month transitional period (and so will apply from March 2026); others after an 18-month transitional period (and so will apply from June 2026), and the compliance deadline for new rules regarding multiple-vote share structures on December 5,2026.

The March changes relate to the alleviated prospectus regimes, with European Commission (Commission) deadlines for delegated acts in relation to reduced content and standardised format and sequence for the EU follow-on prospectus regime (which is replacing the simplified disclosure regime for secondary issuances) and the EU growth issuance prospectus regime. The bulk of the remaining changes are due to come into force and apply from June 5, 2026, including changes to prospectus standardisation, formatting and sequence and the requirement for the set-up of a mechanism to exchange order data (although the deadline by which this mechanism must be operational is not until 5 June 2028).

Also from June 2026, the new level 2 measures establishing an EU code of conduct for issuer-sponsored research are due to apply. This code is non-binding, but all research providers must comply with it if they intend their research to be labelled and distributed as issuer-sponsored rather than as a marketing communication.

Finally, as mentioned above, the new rules regarding multiple-vote share structures, the deadline for compliance by member states is December 5, 2026. However, it should be noted that certain level 2 measures in relation to the Listing Act package have been de-prioritised by the Commission, meaning that the Commission will not adopt those measures before October 1, 2027.

For further detail on the impact of these changes, and focussing on debt capital markets, please see our article here.

The Listing Act package also changes the ability for investment firms to pay for research and execution services jointly or separately, which is discussed below in the Secondary and wholesale markets section.

Also noteworthy is the European Commission’s EU market integration package (mentioned elsewhere in this report) which was published in December 2025. The measures propose amendments across a wide range of legislation, including MiFID, and many of the proposals specifically target financial market infrastructure. Please see further below in the Secondary and wholesale markets section and the Financial market infrastructure section.

Secondary and wholesale markets
UK

During 2025 the FCA focussed on progressing reforms to wholesale financial markets, which resulted from HM Treasury’s Wholesale Markets Review in 2021 and 2022. However, there is still further work to be done in 2026 and there are a number of developments in the pipeline, particularly in relation to market transparency.

The FCA published its policy statement and final rules for the removal of the systematic internaliser regime in Q4 2025. The main tranche of changes came into force on 1 December 2025, and remaining changes will come into force on 30 March 2026. These latter changes include: removing the prohibition on multilateral trading facility operators engaging in matched principal trading; allowing firms operating an organised trading facility to do so using an which is a systematic internaliser; and amending the reference price waiver conditions to allow the reference price to be sourced more widely. 

Also on transparency, the tender process for the UK bond consolidated tape was concluded in August 2025, and in Q4 2025 the FCA launched its consultation on a proposed framework for a UK equity consolidated tape which is due to be in operation in 2027.

The UK Wholesale Markets Review has also led to an incoming revised commodity derivatives regulatory framework. New rules come into effect (for the most part) on July 6, 2026. These rules (among other things) focus the scope of the regime so that it applies to “critical contracts” which are identified by the FCA, and transfer the responsibility for setting and enforcing position limits and granting exemptions to trading venues.

The FCA provided feedback to trading venues on their frameworks for how they will implement the new regime during 2025, and has confirmed that by the end of Q1 2026, it will provide further feedback on all determinations of scope and position limits to ensure a smooth transition into the new regime. By then, any open points on position limits and accountability threshold levels should have been addressed. In relation to the ancillary activities test, which is an important exemption from regulation for commercial participants in commodity markets, the FCA has confirmed its final rules which will come into force when the new framework starts on January 1, 2027, which seek to provide legal certainty to firms, and establish quantitative criteria for the test that make it easier for firms to assess whether the exemption is available to them.

Finally on transparency, a consultation on the broader picture of the structure and transparency of UK equity markets is expected during the first half of the year. The FCA has been engaging with the industry on this topic, and particularly the impact of fragmentation and the changing nature of well-established equity markets.

In July 2025, the FCA published a discussion paper trailing the proposed consultation which came out as part of the package accompanying the chancellor’s Mansion House speech. The discussion paper addresses the systematic internaliser regime for bonds and derivatives, and seeks input on the rise of bilateral negotiation and effectiveness of price formation, how best to identify addressable liquidity, and the functioning of the equity systematic internaliser regime.

The FCA has also commented, in the context of the findings of its multi-firm review of best execution in UK listed cash equities (published in December 2025) that, in conjunction with its analysis of equity markets, it has been exploring execution outcomes across different venues and may consult on rule changes in this area too.

Please see the Market surveillance, market abuse and transaction reporting section for discussion of transaction reporting developments in 2026.

EU

Over the course of 2025, progress was made in terms of level 2 developments required as a result of the EU’s Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) review, following the publication of the finalised level 1 texts in 2024. ESMA completed its four consultation packages, but not before the level 1 implementation deadline in September 2025.

In October 2025, there were two key statements published: first, the Commission’s de-prioritisation statement confirming that it would be delaying certain level 2 and level 3 workstreams until after October 1, 2027; and second, a statement by ESMA confirming (amongst other things) a general expectation that firms comply with the future, amended versions of the MiFID provisions unless otherwise specified. The ESMA statement provides guidance in particular on the commodity derivatives and emissions allowances rules, the systematic internaliser regime, the single volume cap mechanism, and the application of transparency rules amended as a result of the MiFID II and MiFIR review.

ESMA has, however, confirmed in its 2026 workplan that it will focus on non-equity transparency, the requirement to provide market data on a reasonable commercial basis, the single volume cap, and broader trends on market structure and liquidity fragmentation, and encourage supervisory convergence in relation to its opinion on the trading venue perimeter (published in 2023). Also expected in 2026 are ESMA opinions on pre-trade waivers and position limits for agricultural and significant commodity derivatives.

On consolidated tapes, in July 2025 the EU bond consolidated tape provider was announced and the selection process for the equity consolidated tape provider is in train. For the derivatives consolidated tape, the selection procedure for the consolidated tape provider will be launched in early 2026.

Regarding inducements and research, there has been movement in relation to amendments allowing investment firms to pay for research and execution services together, or on a bundled basis. Reflecting parallel liberalisation in the UK, the MiFID II requirement for separate payment was first addressed as part of the EU “quick-fix” MiFID changes in 2021, and further amendments were made by the Listing Act directive which formed part of the Listing Act package to stem the decline in investment research (see further on the Listing Act package above, in the Primary markets section).

The Commission consulted at the end of 2025 on amendments to the relevant delegated directive, to ensure it reflects the fact that firms are now allowed to choose whether to pay separately or on a bundled basis. These amendments are expected to take effect as part of the tranche of Listing Act changes coming in June 2026. Also in June 2026, the temporary exemption from the payment for order flow prohibition under MiFIR will come to an end.

Also noteworthy is the European Commission’s EU market integration package (mentioned elsewhere in this report) which was published in December 2025. The proposed measures include amendments to MiFID, and form a key component of the savings and investment union strategy. Many of the proposals specifically target financial market infrastructure—please see further below in the Financial market infrastructure section.

In relation to the EU commodity derivatives position management regime, the proposals include the introduction of new MiFID provisions, giving trading venues monitoring and information gathering powers, as well as powers to require positions to be terminated or reduced, and to require persons to provide liquidity temporarily, in order to mitigate the impact of a large or dominant position. They also include proposed amendments in relation to the EU commodity derivatives reporting regime, including changes in relation to the publication of weekly reports (subject to minimum thresholds) and classification of position holders according to their main business. As noted elsewhere, any such changes, however, are not imminent given the complexity of the package, and the expected length of time legal deliberations and trilogue negotiations may take.

For more on investment research developments, please also see the comments above in the Primary markets section, which refers to Listing Act package changes in relation to issuer-sponsored research in the EU, which are expected to take effect in June 2026. Related to the topic of inducements, please also see the Buy side and retail section below which in particular notes the upcoming EU common supervisory action anticipated for 2026 in relation to conflicts of interest.

Please see the Market surveillance, market abuse and transaction reporting for transaction reporting developments.

Derivatives
UK

In 2025, the UK regulators made a substantial start on the post-Brexit reframing of the UK version of THE European Market Infrastructure Regulation (EMIR), in line with the UK’s secondary objective for growth and competitiveness and we have seen developments in a number of key areas.

The temporary intragroup exemption regime (known as TIGER) is due to expire on December 31, 2026. The UK regulators have taken steps towards establishing a permanent intragroup regime, with the aim of streamlining the process to support risk management and reduce costs. In November, HM Treasury published a draft statutory instrument and policy statement on the intragroup exemption frameworks for margin and clearing, implementing the government’s intention to make the exemptions permanent and streamlining the intragroup exemption process. The FCA also published an associated consultation paper on rules to replace the relevant regulatory technical standards on the definitions, process, timings and notification requirements of the current regime.

The key point of the proposed position is that the current requirement for intragroup counterparties to be established in a third country that has been deemed “equivalent” under the UK version of EMIR will be removed. At the time of writing, virtually no such equivalence assessments have been concluded by the EU or UK to date, resulting in perpetual roll-over of temporary reliefs.

The new UK regime will enable counterparties to rely on intragroup exemptions on a permanent basis, as long as the relevant conditions are met, and subject to a blacklisting process for non-allowed jurisdictions. Notably, neither the Treasury nor the FCA commented on the removal or amendment of the other relevant conditions including those relating to robust risk-management procedures and the possibility of practical or legal impediment to transfer of own funds or repayment of liabilities.

In addition to the removal of the equivalence criterion, HM Treasury has proposed other ways in which the process can be streamlined and the framework simplified, including moving from an application-based regime to a notification-based regime. The final rules are expected to come into force in the second half of 2026 (likely Q4), before the current regime expires.

Another key area of progress in 2025 was the process commenced for the repeal and replacement of UK EMIR requirements on central counterparties. This is covered in the Financial market infrastructure section below.

An additional recent development is the Bank of England’s consultation paper, published in December 2025, on exempting post-trade risk reduction transactions from the derivatives clearing obligation. The current lack of such an exemption was identified by the UK Wholesale Markets Review as a market hindrance, and it is expected that exempting post-trade risk reduction services will align with the UK’s broader goals of enhancing the stability of the financial system and support innovation and growth. There is not yet any clarity on expected timings, aside from the bank’s proposed three-month implementation period following the publication of rules when finalised.

Moving forward, the UK regulators have confirmed that they will review the remainder of UK EMIR Title II (which relates to clearing, reporting and risk mitigation of over-the-counter derivatives) as a priority, revoking firm-facing requirements to be replaced in statute or via regulatory rules. Consideration will also be given to whether policy changes are needed in priority areas, with the Treasury citing the setting of clearing thresholds as a potential area for review.

For the new UK regime for overseas central counterparties, please see the Financial market infrastructure section below.

For the new UK commodity derivatives regulatory framework which takes effect in 2026, please see the Secondary and wholesale markets section, where this is discussed in the context of other changes stemming from the UK’s Wholesale Market Review.

EU

The key developments impacting the EU derivatives market in 2026 concern the continuing implementation of EMIR 3, which entered into force on December 24, 2024 with the intention of addressing two policy aims: reducing the EU’s reliance on third-country central counterparties (particularly UK central counterparties), and improving the efficiency and resilience of EU clearing markets, data quality and supervisory coordination.

Most notably, EMIR 3 included the “active account requirement”, under which EU clearing members must clear a certain proportion of specified types of trades at EU central counterparties. For further information on EMIR 3, please see our trio of bulletins on: the impact on uncleared over-the-counter derivatives markets, here; the impact on cleared over-the-counter derivatives markets, here; and the active account requirement, here.

Implementation of the active account requirement, especially given the significant package of level 2 measures and the technicality of the requirement, has presented certain challenges to date. In particular, industry has expressed concern about the level 1 active account requirement coming into force mid-2025 but in the absence of clear and consistent level 2 measures. At the time of writing, we are still awaiting, in particular, the publication of the active account conditions regulatory technical standards (although the final report was published by the European Securities and Markets Authority (ESMA) in June 2025) and under the level 1 text’s provisions, by June 25, 2026, ESMA is required to have assessed the effectiveness of the active account requirement. As a reminder, in 2025 the European Commission extended the equivalence for UK central counterparties to June 30, 2028, to provide time for the implementation of EMIR 3.

There was, however, some positive movement at the end of 2025 with regard to the EMIR 3 reporting obligations. In December 2025, ESMA issued a much-anticipated statement confirming that the first reporting submission by entities subject to the active account requirement should be provided by July 2026 and ESMA will develop reporting instructions to provide clarity and consistency, supporting the templates set out in draft regulatory technical standards and will specify the active account requirement conditions. These are currently in draft and being scrutinised by the European Parliament and European Council (Council), having been published by ESMA alongside its final report on the conditions of the active account requirement on June 19, 2025.

The reporting requirement under article 7d of EMIR has also presented challenges in practice. This pertains to reporting of information on clearing activity at recognised third-country central counterparties. ESMA has confirmed that it expects the relevant 2025 data to be submitted with the 2026 reporting cycle, once the level 2 measures have been implemented. In 2026, then, market participants will need to ensure that they track these developments closely to ensure that they are able to report as required in line with the 2026 reporting cycle.

As mentioned above, there is a significant package of level 2 measures supporting EMIR 3’s implementation and so market participants should take note of the European Commission’s letter, published in October 2025, confirming the Commission’s de-prioritisation of level 2 acts in financial services legislation, in line with the Commission’s aim to simplify and streamline regulation and the objectives of the savings and investments union. A number of EMIR 3 level 2 measures feature on the de-prioritisation list, meaning they will not be adopted before October 1, 2027. Certain EMIR 3 level 2 and 3 measures were also subject to de-prioritisation and postponement by ESMA in March 2025.

There is, however, still progress in terms of the implementation of EMIR 3 and, most imminently, the regulatory technical standards for central counterparties establishing admission criteria and assessing the ability of non-financial counterparties acting as clearing members to meet margin requirements and default fund contributions (which were originally subject to a December 25, 2025 submission deadline and are expected to be submitted to the Commission by the end of Q1 2026). As mentioned above, the regulatory technical standards on the conditions of the active account requirement are still being scrutinised by the European Parliament and Council following the publication of ESMA’s final report in June 2025.

In addition to EMIR 3 implementation, market participants should also be aware of the impact of the proposed market integration package, which was published by the European Commission in December 2025. This is a very broad set of legislative measures, including a proposed regulation which will, among other things, make changes to EMIR to designate certain central counterparties as “significant”, which will be supervised directly by ESMA.

Other central counterparties will remain supervised by national competent authority colleges chaired by ESMA, with the option for member states to designate ESMA as the competent authority. Because of the political nature of the proposals, trilogue discussions (which will include specifying the thresholds and methodology used to designate a central counterparty as “significant”) are expected to run through 2026.

For the proposed changes in the EU market integration package which impact the commodity derivatives regulatory framework, please see the Secondary and wholesale markets section above.

Securitisation
UK

The UK Securitisation Regulation was part of the first tranche of changes targeted by the regulators’ work on the UK’s smarter regulatory framework, with the repeal and replacement of the onshored Securitisation Regulation. Phase 1 of the UK reforms saw the introduction of the UK Securitisation Framework from November 1, 2024 (which, subject to certain grandfathering and transitional provisions, was largely a recast of the pre-November 1, 2024 regime into a more fragmented framework split between different statutory instruments and new securitisation-specific rules in the Prudential Regulation Authority (PRA) and the FCA rulebooks).

Phase 2 of the UK reforms is coming—more consultations are expected in H1 2026 and further changes will focus on reforms to the UK transparency and reporting requirements, potentially moving away from “public”/”private” securitisation distinction, substantively amending some of the UK reporting templates (and introducing some new ones) and further fine-tuning and making clearer some of the rules on UK STS, risk retention and investor due diligence (with divergence between FCA and PRA rules on due diligence coming).

Divergence between regulation of securitisation in the EU and UK regimes exists already, and it will continue to evolve as the reforms in the EU and the UK unfold in the course of 2026/27.

EU

In the summer of 2025, the European Commission published the package of its legislative proposals on the wide-ranging prudential and non-prudential securitisation reforms covering amendments to the EU Securitisation Regulation (EU SR), treatment of securitisation in the EU Capital Requirements Regulation, the EU Liquidity Coverage Ratio Delegated Regulation, and the EU Solvency II frameworks. Securitisation reforms have been identified as one of the components of the EU savings and investment union (SIU) and are aimed at making the securitisation regulatory framework simpler, more fit for purpose, facilitating the use of securitisation to the benefit of the EU economy by removing some of the barriers to issuance and investment.

It is hoped that financial institutions will engage in more securitisation activity and that EU banks will use the capital relief for additional lending to the EU households and business. Further discussion on the CRR changes and prudential impact of the package can be found in the Prudential regulation section of this report.

The amendments to the EU Securitisation Regulation are focused in particular on streamlining template-based reporting requirements thus reducing the burden of transparency obligations, certain investor due diligence-related matters including a move to a more principles-based approach to certain due diligence requirements, changes to some aspects of the eligibility criteria for securitisations designated as “simple, transparent and standardised” (STS) and various matters relating to the supervision of securitisation.

The proposed changes amount to a mixed bag overall and while many proposals represent a move in the right direction, the package lacks ambition on some fronts and includes some alarming changes (e.g. a new sanctions regime for non-compliance with due diligence) that could undermine efforts to grow the European securitisation market.

In December 2025, the Council’s negotiation position and the draft reports from the European Parliament’s rapporteur on the Securitisation Regulation and EU Capital Requirements Regulation amendments were published. The European Parliament’s final negotiation position will be confirmed later in 2026 (likely in early May 2026) with the expectation that the trilogue process between the co-legislators will start in H2 2026 and a political compromise on the final position on all amendments will be reached towards the end of 2026/early 2027 (date of application later in 2027 is still to be confirmed).

What is clear is that there are a few areas in the proposals where the Council’s position and the draft position of the Rapporteur are not aligned with the Commission’s proposals, so in both cases it is a combination of some very helpful improvements as well as less helpful changes being proposed by the Council or the draft Rapporteur’s report compared to what was in the Commission’s proposals.

As an aside, the Commission’s EU market integration package published on December 4, 2025 (which is also discussed elsewhere in this report) contains certain securitisation-specific proposals, most notably, proposals for amending the acquisition limits in securitisation for undertakings for collective investment in transferable securities (UCITS). However, the latter is being also addressed through the industry advocacy on the ongoing securitisation-specific reforms (which are on the faster track for being finalised), so it remains to be seen how these two EU workstreams will play out on this issue.

Market surveillance, market abuse and transaction reporting
UK

On short selling, the FCA has confirmed that the new UK regime will be coming into force in June 2026 (subject to transitional provisions). In terms of the current state of play, January 2025 saw the introduction of the Short Selling Regulations 2025, and in October the FCA duly consulted on its proposed rules and guidance for the new UK short selling regime. These will be set out in a new sourcebook which will form part of the FCA handbook of rules and guidance. The UK rulebook will consolidate the existing requirements and introduce targeted changes to reduce regulatory burdens and improve market efficiency. For an overview of the new, lighter-touch short selling regime, please see our article here.

Following its publication of the consultation paper, the FCA subsequently confirmed that the main commencement date for the new regime will be in June 2026, with the final rules and statement of policy published two months before, in April 2026. The current regime will be revoked at that point, meaning that (among other things) the removal of sovereign debt and sovereign credit default swaps from scope will come into effect from June 2026.

However, the FCA will retain ad hoc powers to request information on those instruments. Significant changes will be coming into force, including changes to the timing and deadlines of reports and publication of data, the new reportable shares list (which is replacing the current exempt share list) and the aggregation of the data published in relation to net short positions, meaning that position holders will no longer be identifiable.

Later in 2026, a second phase of implementation will be actioned. In December 2026, operational changes will be made to the reporting systems to allow bulk uploads and fully implement the new mechanism for market maker exemption notifications, where the new regime includes certain modifications to make it easier for firms to use this exemption. Phase 2 will close on June 1, 2027, which marks the end of the transitional period for market maker exemptions. Looking further ahead, the FCA proposed that the reportable shares list would be updated on April 1, 2028 following the FCA’s review, and a two-yearly review cycle will be applied thereafter.

Another area which will remain in the spotlight in 2026 in the UK is transaction reporting. Following its discussion paper in 2024, the FCA is currently consulting on improving the UK transaction reporting regime—being the onshored MiFIR transaction reporting regime which includes a mandatory 65-field reporting template. The consultation’s aims are in step with other initiatives both in the UK and EU in terms of seeking simplification and streamlining requirements, and reducing the regulatory and administrative burden on firms without compromising the regulator’s ability to monitor the market effectively.

As a recap, there are some significant changes proposed in relation to the scope of the transaction reporting regime, including carving out foreign exchange derivatives and financial instruments tradeable only on EU trading venues, which will be good news to many firms.

From the buy-side perspective, there is moderately good news in the FCA’s proposal for conditional single-sided reporting, which seeks to make the current article 4 transmission route for reporting more usable; however, this proposal stops short of a total exemption for buy-side participants on the grounds that such an exemption would mean too great a loss of visibility for the regulator. On the technical side, the proposals include suggested changes to the reporting fields and flags. While the overall result is a reduction in the number of transaction reporting fields from 65 to 52, the implementation of these technical changes and the further divergence from the EU MiFIR transaction reporting regime may present operational challenges going forward.

In terms of the broader picture, transaction reporting is a key area for awareness, given the UK regulators’ appetite for data-led regulation and the emphasis being placed on reduced and clearer data, which includes fewer errors so that it can be used more effectively for supervision. The FCA has kept transaction reporting in the spotlight over the course of 2025, with significant enforcement activity seen in the cases of Infinox and Sigma and sustained focus in its Market Watch publications during the course of the year. Firms and other market participants would do well to keep a watching brief on transaction reporting developments, not least given the UK regulators’ intention to carry out a longer-term review of reporting requirements across several regimes.

On timings, the FCA plans to publish a policy statement following the current consultation in the second half of 2026, and expects that there will be an implementation period of around 18 months. There will be a follow-up consultation covering transitional provisions and consequential amendments. The FCA also intends to consult on the new transaction reporting user pack in 2026. The FCA has stated that a longer-term review of reporting requirements across transaction reporting regimes (including EMIR and SFTR alongside MiFIR) is planned, which will involve HM Treasury and the Bank of England. A working group will be established to inform the approach, with further information forthcoming in Q1 2026, although the primary focus will be on the MiFIR piece.

EU

Transaction reporting has been front and centre of 2025 and will continue in the limelight for 2026. The MiFID II and MiFIR review work on MiFIR transaction reporting was superseded by a call for evidence by ESMA, published in June 2025, on a holistic approach to simplifying financial transaction reporting. This call for evidence is in line with other EU initiatives for the simplification and streamlining of regulatory requirements, and consequentially reducing the administrative burden on firms operating in the financial markets. The call for evidence goes beyond the MiFIR regime and contemplates various possible approaches involving EMIR and SFTR reporting as well. ESMA expects to publish a final report in 2026, due by Q2.

In 2024, the Listing Act made certain amendments to EU MAR and most of these changes came into force in 2024 (including the clarifications to the “safe harbour” aspects of the market soundings regime which attracted industry attention). Other amendments to MAR will apply from June 5, 2026. One such change relates to the enhancement of competent authorities’ ability to identify and tackle cross-border market abuse by introducing a mechanism for the exchange of order data by competent authorities for shares, by June 5, 2026, and for bonds and futures, by June 5, 2028.

However, the Q1 2026 deadline for the implementing technical standards for the technical details for the appropriate mechanism for the exchange of order book data was listed as a non-essential act in the Commission’s letter communicating the de-prioritisation of certain level 2 acts in financial services legislation, and so adoption will be delayed accordingly. Please also refer to our discussion above on the implementation of the EU Listing Act in the Primary markets section.

Financial market infrastructure
Regulation of FMIs
UK

The Financial Services and Markets Act 2023 brought in significant reforms to the way in which financial market infrastructures are regulated in the UK, giving increased powers to the Bank of England alongside new accountability obligations. During 2025, the bank published various key statements in exercise of its new role, including new fundamental rules for financial market infrastructures (which were published as part of the Mansion House July 2025 publications) and a statement of policy for undertaking rule reviews, in December, which is open to feedback until September 4, 2026.

The fundamental rules are a new set of ten rules which are high level and, unsurprisingly, echo the PRA’s fundamental rules and the FCA’s principles for businesses. They will apply to central counterparties, central securities depositories, recognised payment system operators and specified service providers. The implementation period for all fundamental rules has been extended to July 18, 2026 (with guidance in the supervisory statement also taking effect from that date).

In July 2025, HM Treasury published the statutory instrument to revoke the relevant UK EMIR provisions, and restate any necessary elements, and the Bank of England consulted on the future regulatory framework for central counterparties. HM Treasury intends to lay the statutory instrument before Parliament in 2026, with the bank’s final rules for financial market infrastructures published no earlier than the end of the first half of 2026.

The proposals include some policy changes—most notably a new “second skin in the game” (referred to as SSITG) requirement which introduces a new tranche of central counterparty capital into the default waterfall, to be used pro rata with default fund contributions of non-defaulting members. There are also proposed policy changes in relation to porting, margin requirements, liquidity risk controls, the change in control framework and the supervisory process.

A six-month implementation period is proposed for most of the changes, which would mean an implementation deadline of the end of 2026; however, the bank proposes a longer 12-month implementation period in relation to new margin simulation requirements, and a two-year phase-in period for the SSITG requirement.

Please also see the Derivatives section above in relation to the Bank of England’s consultation on exempting post-trade risk reduction transactions from the clearing obligation. This was identified as an area for improvement during HM Treasury’s Wholesale Markets Review.

EU

As noted elsewhere in this report, in December 2025, the European Commission adopted a major legislative package, the EU market integration package, which is a cornerstone of the savings and investments union strategy. In line with the strategy and other in-flight Commission workstreams, the package aims to tackle barriers in relation to national implementation and supervisory divergence, and streamline duplicative or overlapping requirements. Many of the proposals specifically target financial market infrastructure.

For significant financial market infrastructures established in the EU (trading venues, central counterparties, central securities depositories and cryptoasset service providers), the Commission is proposing direct supervision by ESMA, with strengthened supervisory convergence tools. There are proposed amendments removing barriers to cross-border trading and settlement and streamlining passporting. The proposals also include the introduction of a new framework for market operators seeking to operate more than one trading venue in more than one member state in reliance on a single authorisation granted by ESMA. In addition, the package features measures to modernise existing regulation to cater for distributed ledger technology, and in particular to ensure technological neutrality in settlement and collateral frameworks.

Predictably, given the breadth, nature and harmonisation intent of the package, the legislative impact is wide-ranging. The substantive amendments cover the ESMA Regulation, the European Market Infrastructure Regulation, the Markets in Financial Instruments Directive and Regulation, the Central Securities Depositories Regulation, the Digital Ledger Technology Pilot Regime, the Markets in Cryptoassets Regulation, and the Settlement Finality Directive, which is being re-stated as a regulation.

Other targeted amendments are proposed in relation to other regulations, to align them with the proposed ESMA supervisory framework and harmonise national competent authority cooperation, reporting and data-sharing. These amendments impact the recovery and resolution regime for central counterparties, securities financing transactions, benchmarks, simple, transparent and standardised securitisations, green bonds and ESG ratings.

In terms of what lies ahead in 2026, given the spread and impact of the proposals, legislative deliberations in the European Parliament and Council are expected to be lengthy, and no indicative timings have yet been given as to when political and technical trilogues may commence.

In terms of other specific developments for the year ahead, in December 2025 ESMA published its final report on the guidelines on internal controls for benchmark administrators, credit rating agencies and market transparency infrastructures with new guidelines (which will repeal and replace the existing guidelines on internal control for credit rating agencies) which will become effective on October 1, 2026. In addition, certain outstanding articles of CSDR Refit will come into effect from January 17, 2026 (although note that remaining level 2 measures resulting from CSDR Refit changes are subject to the Commission’s de-prioritisation and postponement decision as communicated on October 1, 2025).

Settlement
UK

In the UK, the key development in relation to settlement is the work towards the move to T+1, which is set to go-live on October 11, 2027. In November 2025, HM Treasury published its draft statutory instrument amending the onshored UK version of the Central Securities Depository Regulation to allow for T+1. Notably, the statutory instrument not only seeks to make the amendment necessary to shorten the settlement cycle, but includes scope clarification in relation to securities financing transactions. The accompanying policy paper also includes commentary around the treatment of derivatives for the purpose of T+1. The government intends to lay the final statutory instrument ahead of October 11, 2027, with enough notice to ensure certainty for the sector.

In terms of the industry’s work in preparing for the 2027 deadline, the UK T+1 taskforce has made significant progress and collaboration both within the UK financial sector and with the EU and Swiss workstreams, which are also targeting October 11, 2027 for the move to T+1. Key operational deliverables for 2026 include a joint UK/EU testing plan, which is due by the end of Q1 2026 and will be implemented in 2027. Further practical guidance is also expected to be forthcoming during the course of 2026 on the question of “what does good look like” with regards to T+1 implementation.

For information on the consolidated tapes being developed by the UK and EU, these are covered above in the Secondary and wholesale markets section.

EU

Similarly in the EU, work is underway to move to T+1 settlement on October 11, 2027, in coordination with the UK (and Switzerland). Much of the work is coordinated with the UK, although there are some differences (for example, the EU amending regulation making the necessary changes to the EU CSDR in respect of securities financing transactions is drafted slightly differently to the amendment proposed by the UK statutory instrument).

Upcoming deliverables include a new EU T+1 handbook, which is expected to be published mid-January 2026. In terms of the existing settlement regime, discussions in the context of T+1 have also indicated that it is hoped that the regulatory technical standards on settlement discipline will be adopted in Q1 2026.

Also of note in relation to EU settlement is the EU market integration package, which includes a proposal to convert the current Settlement Finality Directive into a regulation to address issues caused by fragmentation and facilitate better cross-border operations. The core driver here is the difficulty caused by divergent national implementation and practices, which are undermining legal certainty and market confidence.

The proposed regulation in particular specifies a harmonised procedure for the designation of EU settlement systems and a new framework for the registration of third-country settlement systems in each member state in which they have a participant. Enhanced and expanded insolvency law protections are proposed. The proposed regulation also amends the Financial Collateral Arrangements Directive to include cash, financial instruments and credit claims issued or recorded on distributed ledger technology in scope.

As mentioned above, given the complexity of the package as a whole, legislative deliberations are expected to be lengthy and continue during 2026, and no indicative timings have yet been given as to when trilogues may commence. The Commission is currently consulting, and the proposal is open to feedback from December 18, 2025 for eight weeks, subject to extension to reflect the point at which the proposal is made available in all EU languages.

Clearing
UK

During 2025, work progressed on the new UK framework for overseas central counterparties that offer clearing services directly to UK clearing members, which is replacing the existing equivalence regime. The framework takes the form of an overseas recognition regime (which falls within HM Treasury’s purview), with recognition decisions taken by the Bank of England, in accordance with specified criteria.

As part of the Mansion House output in July 2025, HM Treasury published its policy paper and related statutory instruments, which amend and restate aspects of the UK version of EMIR and other legislative provisions, as well as a draft statutory instrument regarding overseas recognition regime designations. Finally, new rules will set the criteria the bank must consider when determining whether an overseas central counterparty  is of systemic importance to the financial stability of the UK. In parallel, the bank published its draft statement of policy on its approach to tiering overseas central counterparties and comparable compliance, which will replace the equivalent delegated regulations on these topics under UK EMIR.

Equivalence and recognition decisions under the current regime will continue to have effect under the new regime (although the bank may request updated information) and firms in the temporary recognition regime (or its run-off regime) will continue to be able to benefit from these regimes.

The Treasury’s July publications also provided welcome news to overseas central counterparties in the form of a statutory instrument extending the temporary recognition regime for overseas central counterparties until December 31, 2027, and extending the transitional regime for overseas qualifying central counterparties under the UK Capital Requirements for 12 months (meaning the expiry date for most firms will now be December 31, 2026). These extensions are to ensure that overseas central counterparties awaiting a recognition determination will be able to continue to offer their services in the UK, and ensures certainty in relation to firms’ market access as the new regime is bedded in.

In terms of the road ahead, the government intends to lay the statutory instruments in the first half of 2026, with the bank final rules published no earlier than the end of the first half of 2026. For further details on the bank’s work on enhancing central counterparty resilience, which includes proposed changes that will apply to overseas central counterparties which are determined to be systemically important to UK financial stability (and a small number of which will also apply to non-systemic recognised overseas central counterparties), please refer to the Derivatives section above.

A further development in clearing matters which should be kept on the radar for 2026 is the Bank of England’s work on enhancing the resilience of the gilt repo market, an important part of the bank’s work on the resilience of core sterling markets. The bank published a discussion paper in September 2025, which seeks to explore the potential for greater central clearing to enhance the resilience of the gilt repo market. The discussion paper closed in November, and, as at the time of writing, there is not yet any confirmed timing for the publication of feedback and next steps. This follows recent measures in the U.S. to promote clearing of U.S. treasury repos.

EU

Please see the Derivatives section above which includes EMIR 3 changes impacting central counterparties. As noted above, a number of EMIR 3 level 2 measures are being delayed as confirmed by the Commission’s de-prioritisation communication published on October 1, 2025. In addition, in March 2025 ESMA separately issued a communication de-prioritising and postponing certain deliverables which were due in 2025, which also impact certain level 2 and level 3 measures required by EMIR 3 implementation. Commentary is also included in the Derivatives section above in relation to the implementation of the active account requirement.

Benchmarks
UK

On December 17, 2025, HM Treasury published a consultation proposing the repeal and replacement of the UK Benchmarks Regulation with a new Specified Authorised Benchmark Regime. The regime would focus regulatory oversight on a much smaller number of benchmarks and administrators that may pose systemic risks to UK markets, removing the current obligation for authorised firms to use benchmarks on the FCA register. This is in effect a reversion to the position in the UK before the introduction of the EU Benchmarks Regulation, which purported to regulate all benchmark administrators globally, if used in the EU; but this proved unmanageable.

In future, HM Treasury would designate specified benchmarks and administrators, taking advice from the FCA, and publish those designations; the FCA would then set and consult on firm-facing requirements in due course. The consultation does not propose any voluntary opt-in regime. Designation by HM Treasury would turn on the potential impact on the integrity of the UK financial system and the markets that benchmarks measure.

For benchmarks, the proposed criteria pertain to non-substitutability and the risk of significant adverse effects if a benchmark were to cease without sufficient notice or were calculated on unrepresentative or unreliable data. For administrators, an aggregate impact test would apply where, taken together, the firm’s benchmarks could significantly and adversely affect system integrity or consumers if they ceased, were based on unrepresentative or unreliable data, or were not administered in accordance with their methodologies.

For overseas benchmarks, the current equivalence framework would be replaced with an overseas recognition regime. Open questions remain as to whether endorsement and recognition routes will be replaced (or whether reliance on authorisation routes for branches and subsidiaries of international firms would suffice); the appropriate length of any “sufficient notice” period; the position of ESG benchmarks that may fall outside scope and the interaction with the developing ESG ratings regime; removing the commodity benchmarks sub-regime; the proposed removal of supervision of non-authorised benchmark contributors; the potential introduction of supervision for contributors of nonprice data (such as ESG metrics and qualitative indicators); and interactions with other regimes that use benchmark definitions.

Under the new framework, the FCA would have delegated responsibility for firm-facing requirements. The FCA has confirmed that it welcomes the reform of the UK Benchmarks Regulation but has not yet confirmed any specific timings on any consultation on the new rules, merely stating that it will consult in “due course”, with the Regulatory Initiatives Grid indicating that it will not be taking action until after July 2027.

As a reminder, the UK transitional regime for third-country benchmarks is still in force, and not due to expire until 2030.

EU

From January 1, 2026, the EU Benchmark Regulation (BMR) amending regulation will apply, significantly reducing the scope of EU BMR. Only significant and critical benchmarks, plus certain climate and commodity benchmarks, will remain in scope of the core aspects of the regulation. Systemically important third-country FX spot rates (to be identified in a delegated act) and administrators of rates provided by EU and non-EU central banks are exempt.

Benchmarks are determined as significant if they meet the criteria of the new qualitative or quantitative usage threshold tests. Non-significant benchmarks will, from January 1, 2026, fall outside of scope of the core requirements of EU BMR. However, there is a new “opt-in” process allowing EU benchmark administrators of a non-significant benchmark to request a competent authority designation of such benchmark as “significant”, provided certain conditions are met (including an EUR20 billion usage threshold test).

There will be a nine-month transitional period from January 1, 2026 to September 30, 2026. This allows EU and third-country administrators of benchmarks included (as at December 31, 2025) in ESMA’s Article 36 benchmarks register (as authorised, registered or recognised, or as endorsing administrators) to retain that status. From September 30, 2026, administrators that do not administer benchmarks remaining in scope of the revised regime will be removed from the Article 36 benchmarks register.

Furthermore, ESMA published a statement confirming that benchmarks provided by third-country administrators that applied for recognition or endorsement by the end of 2025 may continue to be used unless ESMA refuses the application. For administrators of non-significant benchmarks seeking to “opt-in”, the deadline for requesting that a benchmark be designated “significant” is January 1, 2027.

As a reminder, on December 31, 2025, the exemption in Article 51(5) EU BMR for third-country benchmarks expired. As a result, from January 1, 2026 any third-country benchmarks that had previously relied on this exemption and that remain in-scope of the revised regime have needed to obtain endorsement or recognition, or otherwise be able to benefit from an equivalence decision (although a transitional period applies to the extent an application to ESMA was submitted before the end of 2025). The timing of this expiry coincides with the new significance test coming into force, and so is not an issue for non-significant third-country benchmarks.

Buy side and retail
Funds and financial products
UK

2025 saw progress in the UK’s journey towards a new regime for alternative investment fund managers, as HM Treasury published a consultation paper on meaningful reform of the alternative investment fund managers regime under the UK version of the Alternative Investment Fund Managers Directive (AIFMD). There was welcome content in the HM Treasury’s proposals, including the proposal to categorise alternative investment fund managers into three size bandings based on net asset value (rather than leveraged assets under management), and a correlated, proportional application of the rules.

However, there was less welcome news for listed closed-ended investment companies, as HM Treasury propose to keep those companies in scope of the regime, to ensure financial stability and consumer protection (given that these aspects of the rules in particular are not reflected in the Listings Rules). In parallel, the FCA published a call for input which included possible ways the new rules may be applied and is currently considering feedback. The FCA expects to consult on rules in the first half of 2026.

2026 will see the introduction of the new UK consumer composite investment regime, which was finalised at the end of 2025. The FCA policy statement was published in December, as part of what the FCA described as a “landmark package to boost UK investment culture” which included other publications in respect of client categorisation, consumer access to investments, and the application of the consumer duty. To recap, the scope of the regime is set out in the legislative framework (The Consumer Composite Investments (Designated Activities) Regulations 2024), which specifies designated activities in relation to manufacturing, advising on, offering or selling consumer composite investments to retail investors in the UK. The incoming FCA rules in respect of the new regime are being introduced across various modules of the FCA’s handbook of rules and guidance.

The FCA policy statement confirmed some significant industry wins, including:

some helpful guidance on scope (in particular that plain vanilla listed bonds are not in scope and clarification of the neutral features that will not cause a debt security to fall within the definition of CCI)
simplifying the criteria for non-retail products (removing the term “readily realisable security” and the minimum investment amount requirement of GBP50,000)
a clearer delineation between the responsibilities of manufacturers and distributors (only manufacturers can produce product summaries and not distributors which the FCA had previously proposed)
the removal of the requirement to aggregate one-off costs and ongoing costs
confirming the distinct treatment of structured products, which will calculate their risk and return scores using the value-at-risk equivalent volatility (VEV) methodology and will not automatically be assigned a 9 on the risk and return scale for features such as low liquidity.

For closed-ended investment funds, the policy statement confirmed that, as per the government’s legislative intention, closed-ended investment funds are subject to the new regime but, following extensive industry engagement, the rules do make certain accommodations to reflect the specific nature of such funds.

The FCA policy statement confirms an 18-month implementation period which ends on June 8, 2027, at which point the FCA rules come into full force. However, the legislation comes into effect on April 6, 2026 and this marks the start of a transitional period before the regime goes live, during which manufacturers can choose whether they will continue to produce product information in line with the current regime, or move to using a product summary which complies with the incoming rules.

The UK has also made progress during 2025 in terms of fund tokenisation. For further discussion, please refer to the Digital assets section below.

EU

The EU retail investment strategy was originally launched in 2023, and included two proposals: a regulation in respect of packaged retail and insurance-based investment products (PRIIPs) and an omnibus directive impacting the MiFID, the insurance distribution directive (IDD), Solvency II, the UCITS directive and the AIFMD.

The focus of the strategy is to enhance investor protection, and foster retail participation in the financial market while improving overall market efficiency. Core elements of the package include enhancing disclosure requirements, further regulation of inducements, justified and proportionate costs, changes regarding suitability assessments and improved product governance (introducing value for money and undue costs concepts). The omnibus directive also includes proposals around financial literacy to empower retail investors to make decisions about their financial choices and circumstances.

While both the European Parliament and Council finalised their negotiating positions in 2024, there has been significant movement in terms of the EU’s legislative agenda since. Initially, there was industry pushback on the strategy because it increased complexity and added more red tape and regulation where the industry felt it was not needed. Furthermore, the strategy appeared to contradict the Commission’s stated goals of a simpler regulatory environment and ensuring the EU markets remained competitive.

The industry request to review the strategy, to ensure it would strengthen capital markets and drive retail investment, found further grounds for support when the Commission unveiled its strategy for the savings and investments union in March 2025 and, later in the year, published its report on simplification, implementation and enforcement in October 2025. This political environment has naturally impacted the progress of the retail investment strategy trilogues to date.

On December 18, 2025, the European Parliament and Council confirmed that they had reached provisional agreement on the core elements of the package and technical work is in progress to finalise the legal texts in early 2026. The PRIIPs changes will start applying 18 months after the final text is published in the EU Official Journal (expected to be the second half of 2027).

In terms of the other changes requiring member state transposition, the deadline for transposition is set two years after publication (expected to be the first half of 2028), and new rules applying 30 months after publication (expected to be the second half of 2028). 2026 will see further work to implement the package in full, including the development of technical standards and guidelines by ESMA and European Insurance and Occupational Pensions Authority (EIOPA).

A key deadline for 2026 for the asset management sector is the implementation deadline for AIFMD II, as by April 16, member states must have transposed the directive’s measures into national law. While the new rules cover a range of areas, it is those for loan originating funds that have attracted particular industry attention.

The new regime on loan origination comprises two sets of rules—one which only applies to alternative investment funds (AIFs) falling within the new definition of “loan-originating AIF” and the other being relevant for all AIFs originating loans, irrespective of whether or not loan origination is their main strategy. Although the national implementation deadline is April 16, 2026, existing AIFs originating loans may benefit from certain exemptions and/or a grandfathering period until April 2029.

In terms of the associated level 2 and level 3 measures for the new loan origination regime, progress has been impacted by the de-prioritisation exercises undertaken by ESMA in March 2025, which included a proposed delay to the regulatory technical standards on open-ended loan originating alternative investment funds by six months, and the subsequent de-prioritisation decision of the Commission, which confirmed (among other delays relevant to AIFMD II implementation) that the regulatory technical standards on open-ended loan originating alternative investment funds would not be adopted before October 1, 2027.

The other core element of AIFMD II (which also impacts UCITS funds) is the new requirements for managers of open-ended AIFs and UCITS around liquidity management tools. These aim at harmonising the approach taken across the EU by managers in terms of managing liquidity in preparation for market stress situations, and make clarifications in relation to specific liquidity management tools where practices vary in different EU jurisdictions (such as side pockets).

In November 2025, the Commission adopted the level 2 measures specifying characteristics of liquidity management tools under AIFMD and the UCITS directive, which introduce clarifications in particular in relation to redemption gates, redemption in kind and side pockets. These regulatory technical standards are expected to be published in the Official Journal in Q1 2026.

In parallel, ESMA published its final report on the amended guidelines on the selection and calibration of liquidity management tools (which were updated in light of changes to the level 2 measures). The guidelines will apply from the application date of the regulatory technical standards on the characteristics of the liquidity management tools. For open-ended AIFs and UCITS which are constituted before April 16, 2026 (the implementation deadline for AIFMD II), there is a one-year transitional period so the compliance deadline will be April 16, 2027.

On the UCITS side, it is worth noting that the Commission previously indicated that it would move forward with public consultations and market analysis following ESMA’s technical advice on amending the UCITS Eligible Assets Directive (which was submitted to the Commission in June 2025). However, there is not yet clarity on timings, and notably the Commission’s 2026 workplan does not include any reference to a legislative proposal for this workstream.

Also noteworthy is the review by the European Commission of the regime for European Venture Capital Funds (known as EuVECA) which is expected for Q3 2026. It is anticipated that the review will cover expanding the scope and flexibility of the regime, and will propose changes to eligibility and portfolio composition rules.

Fund and asset managers will also need to monitor developments in respect of the EU market integration package, which was adopted by the Commission in December 2025. The package includes many changes that will impact the sector, in particular, a proposal amending the UCITS directive, AIFMD and MiFID. In particular, the proposals target the harmonisation of UCITS authorisation, prudential and conduct rules, streamlined passporting and cross-border marketing processes for management companies, and the introduction of the depositary passport.

While fund managers (unlike significant financial market infrastructures) are not in line for direct ESMA supervision, they may nonetheless be indirectly impacted by the proposals in relation to supervisory convergence and data collection, where ESMA’s powers are being extended to facilitate the cooperation of national competent authorities, and ensure financial market participants are subject to high-quality supervision and adequate enforcement.

For 2026 horizon scanning in relation to ESG matters, including those which impact buy side and retail sectors, please see the Sustainability and ESG section of this report.

Clients, investors and consumers
UK

In 2026, there will be a sustained focus on this sector as the regulators and UK government continue to encourage retail investment and support the UK’s growth and competitiveness agenda. This was heralded in December 2025, when the FCA issued a package of measures and proposals aimed at improving the UK’s investment culture, a key part of which is enabling retail investment and engaging consumers so that they have the confidence to invest.

The publications cover a range of areas, including a discussion paper on expanding consumer access to investments. It centres on two key themes: changes to how retail investors access investments (including digital investments and tokenisation, and non-advised platforms such as trading apps); and the extent to which the FCA can rebalance risk within the regulatory framework without compromising consumer understanding and confidence.

Predictably, the FCA highlights concerns around access to risky investments, including contracts for difference, high-risk exchange traded products, complex structured products and cryptoasset proxies. No specific follow-up is confirmed in the discussion paper, but discussion of these topics will form part of the cross-cutting work being carried out by the FCA in relation to consumers, artificial intelligence and digitisation.

Also as part of this “landmark package”, the FCA published a consultation paper on client categorisation and conflicts of interest. The question of client categorisation is, again, being raised in light of the objective to encourage retail investment in the capital markets to drive growth and competition. The proposals seek to facilitate investment by removing the current quantitative test, and enhancing the qualitative test, for opting up clients to professional status, and introducing a new alternative wealth assessment route. There is not yet clarity on the timeline for final rules, although the Regulatory Initiatives Grid indicates various market engagement on consumer-related initiatives throughout the course of 2026.

In the same week, the FCA published its policy statement and near-final rules on targeted support, a new regulated activity. The aim of targeted support is to allow authorised firms to provide recommendations designed for pre‑defined consumer segments with common needs or objectives, rather than comprehensive, individualised advice. The regime is outcomes‑focused, underpinned by the consumer duty and product governance rules, and supported further by bespoke rules in the FCA handbook. Suitability is assessed at segment level, not individually, and firms are not required to undertake ongoing suitability reviews for each consumer. The gateway for authorisation applications will open in March 2026, with the new regime expected to come into force in April 2026 and a post-implementation review due in 2028. For further insights, please see our article here and summary information here, with information on the practicalities of applying for permission to conduct the new regulated activity of providing targeted support here.

Turning to the inevitable consumer duty, 2025 saw a distinct shift in supervisory messaging as the FCA acknowledged that there remain areas of confusion, and FCA commentary in this regard noted that it was aware of firms going above and beyond in their application of the consumer duty—particularly wholesale firms. From the outset, the FCA’s framework envisaged that the duty could apply to wholesale firms where they determine or materially influence retail outcomes within distribution chains, even without a direct retail relationship, while the concept of “manufacturing” and “co‑manufacturing” has been central to allocating responsibilities across value chains. For more discussion on this and other aspects of the FCA’s work in this space, please listen to our webinar here.

The chancellor’s Mansion House speech in July 2025 cast the spotlight on the application of the duty to wholesale firms, and the FCA duly published a response in September confirming a four-point action plan to address these concerns. This included providing clarity on the FCA’s expectations when firms manufacture products and consulting on client categorisation.

The FCA recognised concerns about uncertainty across distribution chains, business-to-business activities which should not be captured, services reaching consumers outside the UK, and the burden on wholesale providers distant from the end retail investor. The regulator has accordingly committed to clarifying scope and expectations, assessing whether existing exemptions go far enough, and setting out when and how firms may reasonably rely on each other in chains. The FCA also indicated an intention to draw a clearer line around non‑UK business being outside the consumer duty.

The FCA has already delivered its statement of expectations for co-manufacturers, which was published in December 2025; however, this did not provide a great deal of detail or drill into all issues and areas of uncertainty, as discussed in our bulletin here. The FCA also issued the client categorisation and conflicts of interest consultation; for our bulletin on this, see here.

Looking ahead to 2026, in the first half of the year the FCA will consult on changes to the rules on the application of the consumer duty, including through distribution chains and business-to-business activities. As mentioned above, the FCA will also propose to remove non-UK customer business from the scope of the consumer duty in the first half of 2026. Separately, the FCA will publish findings on its review of how model portfolio services apply the consumer duty in summer 2026, and more broadly, work will continue on four cross-cutting reviews of: the products and services outcome; firms’ approaches to outcomes monitoring; customer journey design; and the consumer understanding outcome.

The other key area on the radar in 2026 is lending to consumers, where the sector will be seeing developments particularly in relation to regulated mortgages, motor finance and deferred payment credit (previously known as buy-now, pay-later). The FCA’s mortgage workplan for 2026 and beyond, which includes a feedback statement on its recent mortgage rules review alongside an indicative 2026 roadmap, confirms a number of consultations for 2026 and possible consultations for 2027.

In Q1, the FCA and PRA will consult on the loan-to-income framework following the Financial Policy Committee’s recommendation to provide more flexibility at the firm level for lending at 4.5x income and above, and in the first half of 2026, the FCA plans to consult on responsible lending rules, and proposals around affordability in the retirement interest only segment. The FCA then expects to publish feedback and final policy from these consultations in the second half of 2026. The FCA has also confirmed that no further near-term changes are envisaged to the shared ownership regime, the interest rate stress approach or the treatment of long-term fixed rates.

In the longer term, the FCA will also undertake in 2026 a series of information-gathering and policy-development exercises designed to inform consultations in 2027. These include a focused market study on later life lending, aimed at assessing whether the market is positioned to meet growing consumer demand; work under the consumer duty on disclosure, with an emphasis on enabling innovation and improving digital customer journeys; and related research and policy development on the broader disclosure framework.

The FCA also flags that mortgage standards may be affected by cross-cutting initiatives running in parallel, notably ongoing consumer duty supervision and guidance work (as discussed above), remedies following the credit information market study, the review of securitisation rules, and the programme to transform data collections.

Subject to the outcomes of this work, the FCA is considering consulting in the first half of 2027 on three areas: holistic advice within the later life lending context; a modernised disclosure framework to support innovation and digitalisation; and debt consolidation measures aimed at strengthening protections for vulnerable consumers. Consistent with the FCA’s overarching themes—supporting first-time buyers and underserved groups, enhancing later life lending, enabling innovation, and protecting vulnerable consumers—feedback statements and policy for these potential consultations would be expected in the second half of 2027.

A regular feature of 2025 headlines was the UK Supreme Court decision that lenders who financed car loans were not liable to their customers for failing to obtain their informed consent to commission payments made by lenders to the dealers arranging the finance. In parallel with the UK court proceedings, the FCA has been providing regular updates as to how it proposes to handle motor finance complaints in light of the court proceedings.

In December 2025, the FCA published its policy statement on changes to handling rules for motor finance complaints including an extension of time for final responses (except for leasing complaints) to May 31, 2026. The FCA is expected to confirm final rules regarding the redress scheme in March 2026, at which point the scheme will commence and compensation payments will be paid paid later in the year. For further information, please see our bulletin on the consultation here.

For those monitoring the review of the Consumer Credit Act 1974, HM Treasury have not yet confirmed timings on the next stage of their consultation process. The phase 1 consultation was carried out in Q2 2025 and closed in July 2025. Consumer credit and other firms may also be interested in looking out for the FCA’s outreach for views on advertising consumer credit (focussing on CONC 3) which is expected in Q2 2026.

A final development for the 2026 radar relates to the project to modernise the redress framework and review the Financial Ombudsman Service (FOS). One of the many publications accompanying July’s Mansion House speech was HM Treasury’s consultation on its review of the FOS, published alongside a joint FCA/FOS consultation on proposals for modernisation. In line with the FCA’s 2025–2030 strategy and the UK government’s regulatory action plan, the proposals seek to align the FCA and Financial Ombudsman Service (FOS) roles and responsibilities and provide clarity for firms and consumers alike. There will be further developments during 2026, as the FCA and FOS plan to publish their policy statement and a further consultation in the first half of the year.

For discussion of the incoming UK consumer composite investment regime, please see separate commentary in the Funds and financial products section above.

For discussion of the upcoming changes in relation to deferred payment credit (previously known as buy-now, pay-later), please see the Payment services and payment systems section of this report.

EU

Clients, investors and consumers will of course be impacted (both directly and indirectly) by financial markets developments in relation to the capital markets and infrastructure which are discussed in the Capital markets section and Financial market infrastructure section above, which highlight developments targeting growth in terms of encouraging more retail investment and greater consumer access to investments.

In particular, the EU’s retail investment strategy work following the provisional agreement reached in December 2025 will be of significant interest to buy side and retail firms. It is also worth noting some other specific workstreams relevant to the retail sector: June 19, 2026 is the deadline for member states to have transposed the directive on distance marketing of financial services, which extends certain consumer protection requirements to financial services; and in 2026 a common supervisory action on MiFID II conflicts of interest requirements (launched in December 2025) will be carried out during the course of the year.

In addition, work will continue in 2026 on implementing the European Single Access Point (ESAP). The ESAP project is centred on the concept of there being a single access point about EU companies and products which is aimed at encouraging easier access to information for investors, and increasing companies’ visibility (particularly small and medium-sized enterprises) towards investors. The ESAP is due to start collecting information from July 2026 (although information will not be published until 2027, and no later than July 2027).

Digital assets

Please note that this section only covers digital assets matters specifically relating to financial instruments (rather than broader crypto topics). For the wider regulatory outlook for cryptoassets, please see the Fintech/Digital assets section of this report.

International

Globally, there are a number of moving parts at play which impact the regulation of digital assets in capital, wholesale and retail markets, as the merging of fintech and trad-fi continues. There is also a trend for digital asset regulation, which for many jurisdictions has, up until now, predominantly sat within or alongside payments-related regulation, to expand or move into securities regulation.

Tokenisation will continue to feature in the 2026 limelight. Since the arrival of blockchain, the financial services sector has been exploring various use cases for tokenisation and 2026 is expected to be a significant year for progress on projects on tokenised collateral, particularly given the U.S. Commodity Futures Trading Commission’s (CFTC) 2025 request for input on its use in derivatives markets. Tokenised stocks are expected to be launched in Japan in 2026 (with 2026 being declared the “Digital Year” by the Japanese finance minister), subject to the required legislative and regulatory processes. For commentary on the international Project Guardian work, this is covered in the UK sub-section below.

The rise of digital ledger technology and other technological advances also, naturally, feeds into interoperability considerations and the integration of firms offering regulated services and products with the technology underpinning the provision of that service or product, and the necessary associated activities. It will be essential for firms operating in this space to think about how matching, settlement and flow activation will work in practice as legislation and regulation solidifies over the next 12 months. This topic goes hand-in-hand with operational resilience matters —for further details, please see the Outsourcing and operational resilience section of this report.

UK

In conjunction with the chancellor’s Mansion House speech in July 2025, the UK government published its Wholesale Financial Markets Digital strategy, which draws together a range of ongoing and imminent government and regulatory workstreams on market digitalisation. The strategy purports to cover three broad areas: market optimisation, market transformation, and market leadership; although in reality, the initiatives and projects cited have implications and potential spanning all three and, of course, play into the broader UK growth and competitiveness agenda. Core elements of the strategy are highlighted below. For discussion of the UK’s move to T+1—which is relevant here as part of the UK’s commitment to automation and removing manual processes relying on human intervention from wholesale markets—please see the discussion in the Financial market infrastructure section.

In terms of market transformation, and as mentioned above in the context of international developments, a key component is tokenisation and the drive to realise the benefits of technologies such as distributed ledger technology—particularly in the use cases of fund tokenisation and the post-trade processes including tokenised collateral. In October 2025, the FCA published its consultation paper on progressing fund tokenisation which proposes changes to the FCA rules for collective investment schemes to clarify the application of those rules to authorised funds (and their managers) using digital ledger technology to operate the unitholder register.

The proposed changes also include amendments to allow for direct dealing models, where the authorised fund manager no longer sits between the investor and the fund, but the investor makes payments into and receives payments from an issuer and cancellations account, and the fund itself (or the depositary) acts as principal in unit deals. The current rules do not prohibit a direct dealing model, but are drafted on the presumption that there will be an authorised fund manager acting as principal, and so these changes will make the relevant requirements more readily applicable.

The consultation paper also provides feedback on the FCA’s earlier 2023 consultation on tokenised money market funds, and confirms that work is continuing with the Bank of England (in the UK) and through Project Guardian, which is an international initiative spearheaded by the Monetary Authority of Singapore focussing on asset tokenisation.

The FCA further proposes possible modifications to the general asset eligibility rules for UK UCITS so that UCITS managers have more flexibility to use new categories of assets in order to support fund operations on-chain or other operational purposes, like unit dealing. Notably, the consultation also asks whether the consumer duty would provide sufficient protection for investors, if funds were allowed to hold cryptoassets for settlement and fund operational purposes only. The FCA is due to publish the policy statement in respect of this consultation in the first half of 2026.

Also in conjunction with the chancellor’s Mansion House speech the UK government published a policy paper update on the Digital Gilt Instrument (DIGIT) pilot, confirming that, in response to views from potential suppliers and others in the sector, the pilot would also be testing the settlement of DIGIT on distributed ledger technology (including the cash leg of transactions), enabling settlement of over-the-counter trades, interoperability as between traditional and digital markets, and transparency. The update also notes ongoing development in relation to collateral mobility, listings and other secondary market features. The tender submission deadline was in November 2025, but the results are still outstanding. DIGIT will be issued as a transferable security on a platform within the UK’s digital securities sandbox (DSS).

Relatedly on the DSS, progress will continue over the course of 2026 as current sandbox participants exploring the use of technology with central securities depository activities (and potentially in combination with trading venue activities) pass through gate 2 and into the go-live stage—meaning, in practical terms, we will be seeing more firms commence real-world digital ledger technology operations this year. The expected timelines are mobile, but original indicative timeframes allowed for two gate 3 review points in 2026. The DSS is set to close to new entrants around March 2027.

For discussion of the FCA’s ongoing work in the crypto space, please see the Fintech/Digital assets section of this report.

EU

The EU markets integration package, which has been mentioned a number of times elsewhere in this report, proposes amendments to enable distributed ledger technology (DLT)-based innovation and in particular changes to post-trade legislation and the distributed ledger technology DLT Pilot Regime. The European Commission proposal recognises that there are aspects of the DLT Pilot Regime which present challenges to small and scaling-up participants, and there is a lack of certainty about the long-term picture for pilot participants. As noted elsewhere, any such changes, however, are not imminent given the complexity of the package, and the expected length of time legal deliberations and trilogue negotiations may take.

Also on the EU side, the Pontes project, which links market DLT platforms and TARGET services, will advance during the course of 2026. A pilot is due to be launched by the Eurosystem by Q3 2026. For more on European digital assets topics, please see the Fintech/Digital assets section of this report.