In the UK and the EU, regulators have been active in proposing new regulations and updating the market on their policy programmes for next year.
By GreySpark’s Declan Sharp, Consultant and Rachel Lindstrom, Head of Capital Markets Intelligence practice
EU Update
On the 03 October 2025, the European Securities and Markets Authority (ESMA) published its work programme for 2026. For many capital markets firms, the most important policy review that ESMA will conduct next year is a ‘holistic review of transactional reporting’ under the Markets in Financial Instruments Regulation (MiFIR), European Market Infrastructure Regulation (EMIR) and Securities Financing Transactions Regulation (SFTR). ESMA has largely started to pursue a ‘simplification and burden reduction’ mandate for regulatory change. Key to this is further development and simplification of a Single Rulebook for market participants. ESMA will further its objective of simplifying onboarding for investors and companies into the EU marketplace by creating the first centralised portal for public access to finance and capital markets information as part of the Single Access Point (ESAP) initiative. The legislative and regulatory priorities for regulatory will be the following.
ESMA will start to exercise new powers conferred under the Digital Operational Resilience Act (DORA). In 2026, ESMA will start exercising its joint oversight with other EU regulators over Critical Third-Party Providers (CTPPs) ‘for the first time’ as part of efforts to reinforce digital resilience and regulatory alignment. ESMA will start establishing systems for reporting cyber incidents and enhancing tools to support supervisory consistency across the EU. The remit of the regulator over market participants has also been expanded to cover the Consolidated Tape Providers (CTP) and Environmental, Societal and Governance (ESG) rating providers and European Green Bond framework external reviewers (EUGBRs). Furthermore, ESMA will continue rolling out the Markets in Crypto-Assets (MiCA) framework to increase its oversight of the growing tokenised asset class. In 2026, ESMA will issue regular updates and work with market participants to support the readiness of the market and the regulator for the transition to a T+1 settlement cycle.
The work programme provides details on Environmental, Social and Governance (ESG) policy objectives and this is supported by a, Final Report containing draft Regulatory Technical Standards (RTS) for the ESG Regulations, which was released on 15 October 2025. The draft RTS aims to simplify information requirements and compliance obligations for firms have been revised, and some requirements imposed on ESG data vendors have been removed. The draft RTS are subject to European Commission (EC) approval and non-objection by the EU Parliament.
Data is central to ESMA’s capabilities and it has outlined a ‘data strategy’. It includes the development of a data platform, studies on data centralisation and the use of AI tools for market supervision and abuse detection, with the objective of enhancing supervision, surveillance, efficiency and transparency, while reducing regulatory burden on firms. The data platform will integrate data from various data flows within ESMA and provide a dashboard and analytics for users, which will most likely be national regulators, to better manage data within their own jurisdictions and to foster collaboration between them. ESMA will also launch ‘Data Days’, beginning on 02 December 2025, that will showcase how smarter data use can help firms reduce regulatory burdens.
Another step on the road to T+1 Settlement transition was made in an update from ESMA on 12 October 2025, with the regulator publishing its (draft) final report on amendments to the RTS that supports the Central Securities Depository Regulation (CSDR). Section 3 of the final report outlines the multitude of draft amendments to the RTS, that may impact obligations on investment, settlement and market operator firms. The draft RTS has been submitted to the EC for adoption. The proposed implementation deadline for the measures outlined in the draft RTS, leading up to the ultimate 11 October 2027 live date are:
- pre-settlement requirements such timing of allocations and confirmation are to take effect from 07 December 2026;
- enhanced reporting and transparency rules, including the monitoring and reporting of settlement fails are to apply from 01 July 2027, and
- all other obligations and functionalities are to apply from 11 October 2027.
Importantly for capital markets compliance functions, on 10 October 2025, ESMA issued a new version of its manual on pre-and-post trade transparency rules under the MiFID II/MiFIR review to guide firms on how to apply these rules. These rules and their application will potentially change based on the future adoption and application of various RTSs that qualify the rules set out in the MiFID II & MiFIR review package passed last year. Concurrently, a public statement on ESMA’s adoption review measures was given to update the market on timeframes for full adoption and on the development of various RTS that supplement the review package. The public statement further highlighted the transition from a double volume cap mechanism to a single volume cap mechanism, the update on pre- and post-trade transparency implementation and the end of some financial data reporting requirements.
Lastly, the European Banking Authority (EBA) has also been active recently, launching its Annual Transparency and Data Collection Exercise on 29 September 2025 and publishing its 2026 Work Programme on 01 October 2025. The three strategic priorities for the EBA are to develop a legislative package for single market banking and payments, perform risk assessments in preparation of a 2027 EU-wide stress test and, lastly, build further technological capacity to capture decentralised finance, greater automated data flows and the use of AI by both regulators and market participants.
UK Update
In the UK, transferring and amending MiFID into UK regulation and the Financial Conduct Authority’s (FCA’s) single rulebook is underway. Both the Prudential Regulation Authority (PRA) and the FCA have issued final policy statements confirming how they will replicate ‘firm-facing’ provision of the Markets in Financial Instruments Directive Organisational Regulation (MiFID Org Reg) into their rulebooks. The FCA issued Policy Statement PS25/13, confirming it will transfer the firm-facing requirements of the MiFID Org Reg into the FCA Handbook without significant policy changes. The PRA similarly published PS16/25, restating the MiFID Org Reg’s organisational requirements in its Rulebook with limited material amendments. However, the FCA has confirmed it is removing the requirement for ‘optional investment firms’ – firms which qualify for certain obligation exemptions under MiFID – to report a 10% drop in portfolio value of a retail client as per the Conduct of Business Sourcebook. Unlike the EU’s MiFID, which allowed for information to be given to retail clients over ‘a durable medium’, the new FCA rules ‘make electronic communications the default mode of communication with retail clients’ as of 12 January 2026. Both sets of changes took effect on 23 October 2025, but for certain exceptions and represent a new milestone in the onshoring and amending of EU MiFID regulations within the UK.
Regulators have continued to report on market health. The FCA published Market Watch 84 on 30 September 2025, which focussed on the reporting of firms after the UK EMIR Refit that went into force on 31 March 2025. It found that while most respondents reported correctly, most problems were either caused by poor resource allocation or by dependence on third-party vendors or agents that provided poor quality solutions. Similarly, on 30 September 2025, the UK’s Financial Reporting Council (FRC) published its Annual Review of Corporate Reporting 2024/25, which gave its findings from a study of 222 annual reports from FTSE listed and large private companies. It found that the overall quality was strong, but that asset and cash flow classification were the most frequent issues.
The UK is continuing efforts to re-engage with European markets. The Berne Financial Services Agreement advanced with a memorandum of understanding between UK and Swiss regulators on 22 September 2025, covering banking, investment, insurance, asset management and financial market infrastructure. Detailed guidance is expected in November 2025, with full implementation in early 2026. Separately, HM Treasury’s 02 October 2025 policy paper reported on the policy outcomes of the UK-EU Financial Regulatory Forum, highlighting cooperation on regulation, AML, sanctions and support for growth and innovation.
The Bank of England (BoE) and the PRA have similarly been busy. The BoE proposed to partially revoke Resolution Reporting Standards (UKTS 2018/1624 and COREP13) by deleting six templates used for resolution reporting, aiming to simplify and modernise data requirements. The consultation closes on 21 November 2025, with changes expected before the April 2026 reporting cycle. Furthermore, the Bank also proposed the deletion of 34 banking reporting templates to save time and money for banks, with the PRA asking for comments from banks for this consultation and reform project currently. Sam Woods, CEO of the PRA, gave his final Mansion House Speech on 22 October 2025, warning against loosening capital requirements for banks, comparing the prospect to throwing protective gear off a mountainside after scaling the proverbial mountain of regulating the banks post-GFC.
Both the PRA and the FCA have proposed reforms to aid the adoption of tokenisation in the UK markets. On 15 October 2025, the BoE set out its approach to fostering innovation in AI, DLT, quantum computing, tokenisation and stablecoins.
The Bank highlighted these technologies’ transformative potential for the UK economy. Deputy Governor Sarah Breeden outlined plans for the expansion of the Digital Securities Sandbox, enabling real-world transactions in tokenised securities and regulated stablecoins under controlled safeguards in her speech delivered on the same day.
The FCA is proposing further steps to allow for and promote fund tokenisation as seen in its recent consultation package.
In September 2025, the Central Counterparties (Transitional Provision) (Extension and Amendment) Regulations 2025 (SI 2025/1030) extended two transitional regulations that allowed for the extension of overseas firms to qualify with UK licenses and for UK firms to manage their overseas counterparty risk. Overseas central counterparties (CCPs) will be allowed to continue offering services in the UK under the Temporary Recognition Regime (TRR) until 31 December 2027, while they await application to be qualified overseas CCPs (QCCPs). Furthermore, the transitional capital regime for UK banks and investment firms with exposures to QCCPs has been extended by 12 months to 31 December 2026, to avoid abrupt increases in capital requirements. Separately, the FCA has updated the definition of regulatory capital under MiFIDPRU 3, effective from 01 April 2026, though the FCA does not expect the changes to materially affect firms’ capital arrangements.
On 15 October 2025, the International Regulatory Strategy Group of the City of London, International Regulatory Strategy Group released a global regulatory dashboard comparing financial regulation across major jurisdictions, including the UK, the US, the EU, China, Japan, Singapore, Switzerland and the UAE. In a move to attract global firms, the UK’s Chancellor of the Exchequer announced a new Investment Office for Financial Services that will provide a free support hub to help international providers navigate UK regulation and market entry.
