The UK and the EU have announced significant reform or consultations with the view for further reform programmes in Q2 2026. The UK has made major strides in the reform of UK money markets, sustainability reporting and bank ‘ring-fencing’, and has launched the UK’s Bond Consolidated Tape. In the EU, the most significant reforms currently going through the EU Parliament are new sustainability reporting rules and further consultations by the European Banking Authority (EBA) on reporting standards, also related to ESG. For both jurisdictions, it seems ESG reporting is still front and centre of their regulatory priorities. Similarly, both the EBA and the Bank of England have announced further measures and policies to regulate the trading of stablecoins.
By GreySpark’s Declan Sharp, Analyst Consultant and Rachel Lindstrom, Head of Capital Markets Intelligence practice
1.0 European Union
The EU’s financial services regulatory agenda in 2026 has been characterised by a continued focus on sustainability, regulatory simplification and efficiency. Policymakers and regulators have focused on reporting requirements, sustainability and digital assets. Although not an EU body, the following section includes a recent report from the Basel Committee on ICT best practices for banks.
1.1 The EU’s SFDR 2.0 is Currently Going Through Parliament
The EU’s review of the Sustainable Finance Disclosure Regulation (SFDR 2.0) continues to gather legislative momentum, with the European Parliament signalling a potentially more stringent regime than originally proposed by the European Commission. This also follows a draft report from Rapporteur MEP Gerben-Jan Gerbrandy’s proposals to the Committee on Economic and Monetary Affairs. Proposed amendments include mandatory disclosure of a core set of Principal Adverse Impact (PAI) indicators for categorised products, additional engagement strategy reporting on a comply-or-explain basis and stricter qualification criteria for ESG-labelled funds. A committee vote is scheduled for 15 July 2026, after which the Parliament’s position will form the basis for trilogue negotiations with the Council and Commission.
SFDR 1.0, currently in force, provides for disclosure obligations on sustainable investments or investments that claim to be as such (Article 6 to 9, especially). Under the current proposals, Articles 7 to 9 would be repurposed as product classifications broadly corresponding to ‘Transition’, ‘ESG Basic’ and ‘Sustainable’ categories. These categories would be linked to substantive eligibility criteria that products must satisfy to use the relevant designation. Under proposed Article 9(1)(a), mirrored in proposed Article 7, at least 70% of a product’s investments would need to contribute to a clear and measurable sustainability-related objective. Industry participants have argued that the requirement may be difficult to satisfy in practice, particularly given current limitations in sustainability data and measurement methodologies. However, there was a shortcut added by the Commission for both transition and sustainable investments under articles 7 and 9, that this 70% threshold for both would be satisfied [2] if 15% of investments were allocated to ‘taxonomy aligned’ economic activities according to the EU Taxonomy Regulation [3] and the Disclosure Delegated Act [4]. The Taxonomy Regulation a defined that an economic activity would be classified as environmentally sustainable if the economic activity: contributes to an environmental objective; does no significant harm; meets minimum safeguards; and meets applicable technical screening criteria [5]. Secondly, The Disclosure Delegated Act establishes the methodology and KPIs used to calculate and report Taxonomy alignment. Therefore, in the language of the EU legislation, ‘taxonomy aligned’, refers to activities that meet these pre-existing criteria.
Notably, European Parliament has proposed increasing the threshold from 15% to 20% for certain product categories. This is because the parliament viewed the threshold being too low. This argument was made in the Rapporteur report, which highlighted that 44.1% of Article 9 funds (under SFDR 1.0) would be compliant with the taxonomy aligned threshold according to the Platform on Sustainable Finance [6].
Interestingly, at the time of writing, the European Council has published its proposed amendments to SFDR 2.0. While the Council supports increasing the Taxonomy-alignment threshold to 20% for the proposed Article 7 (Transition) category, it retains the Commission’s proposed 15% threshold for Article 9 (Sustainable) products. These differing positions will now be reconciled through the ordinary legislative process.
1.2 The European Banking Authority Consults on Reporting Requirements
The European Banking Authority (EBA) is currently consulting on simplification of its reporting requirements. Under its supervision, the EBA is empowered to revise EU-wide implementation technical standards, which form part of the basis of EU financial regulation. Specifically, Commission Implementing Regulation (EU) 2024/3117 (ITS on Supervisory Reporting). The consultations will inform proposals developed by the EBA that are planned to apply from September 2027. The reporting standards that are in the sights of the revision programme include: ESG, FINREP, Stress Testing, Liquidity and others. As part of this exercise, the EBA has proposed a new ESG supervisory reporting framework that would replace the current regime. The proposals seek to align supervisory reporting more closely with Pillar 3 ESG disclosures while reducing reporting burdens. Reporting obligations would be tiered according to an institution’s size, complexity and listing status.
1.3 EU and US Cooperation on Stablecoin Supervision
On 02 June 2026, the EBA and the New York State Department of Financial Services (NYDFS) announced a Memorandum of Understanding (MoU) to strengthen transatlantic cooperation on stablecoin supervision. Effective from 13 May 2026, this agreement established a framework for information exchange and coordination regarding stablecoin activities. The MoU will hopefully facilitate cross-border oversight for issuers and market participants, ensuring a robust and globally coordinated regulatory approach.
1.4 Basel Committee Report on ICT Best Practices
The Basel Committee has produced a report on Information Communication Technology (ICT) risk management practices across jurisdictions to inform the banking sector regulatory expectations and best practices. The Committee highlights several emerging good practices, including the use of modular and layered technology architectures to reduce reliance on legacy systems, increased automation and use of AI supported by appropriate human oversight, improved management of nth-party dependencies across ICT supply chains. The report does not introduce new regulatory requirements; it provides insight into supervisory expectations and areas of increasing regulatory focus.
[1] An MEP Committee Leader.
[2] Referred to as ‘safe harbour’ in legal documents and commentary.
[3] Regulation (EU) 2020/852.
[4] Commission Delegated Regulation (EU) 2021/2178.
[5] See Article 3 and subsequent articles that refer to it in Regulation 2020/852.
[6] The report from the Rapporteur, published in 2026, used a figure from the Platform on Sustainable Finance report, that itself used Bloomberg data from September 2024. Notably, the article 9 funds referred to in the Platform report, using Bloomberg 2024 data, would be SFDR 1.0 article 9 funds and not funds which necessarily meet article 9 definitions for SDR 2.0 so the population of funds may not match, and the data may be out of data.
2.0 UK
UK policymakers and regulators have continued to advance reforms aimed at enhancing the competitiveness of the UK’s financial services sector while preserving financial stability and market integrity. Recent developments span a range of areas in the financial markets, including money market funds, fixed income market infrastructure, digital assets, sustainability reporting and bank structural reform. Together, these initiatives demonstrate an increasing emphasis on regulatory proportionality and greater flexibility in supervisory enforcements.
2.1 UK Money Market Regulation
The UK’s Financial Conduct Authority (FCA) set out its plan for delivering new rules and guidance on money market funds (MMFs) regulation in the UK. This comes on the back of the Government’s statement on 14 May 2026 that it intends to replace the UK Money Market Funds Regulation, which was an onshored EU regulation (EU) 2017/1131. Following the FCA’s review of consultation CP23/28 and updated analysis from the Bank of England, the regulator has adjusted its approach to strengthening UK Money Market Fund (MMF) resilience in a new proposal. Rather than implementing the previously proposed universal increases to liquid asset requirements, the FCA will maintain existing statutory minimums. Instead, it is establishing a new ‘supervisory expectation’ through guidance: Stable NAV MMFs will be expected to hold 40% weekly liquid assets (WLA), while variable NAV MMFs will be expected to hold 20% WLA.
2.2 UK Finalises a New Sustainability Reporting Regime
On 25 February 2026, the UK’s Department of Business and Trade (DBT) used its statutory powers to issue new UK Sustainability Reporting Standards (SRS). The document from the DBT includes the General Requirements for Disclosure of Sustainability-related Financial Information (UK SRS S1) and Climate-related Disclosures (UK SRS S2). The standards are now available for voluntary use in the UK. It is currently a voluntary standard and does not have a legal obligation on any UK company. The FCA consulted on requiring UK-listed companies to use the UK SRS. The government is also considering extending the requirements to non-listed UK companies as part of its broader corporate reporting reform programme. The FCA said it will finalise its recommendations for a requirement in 2027 and will publish a policy statement on its response to consultation feedback. The rules are largely based on the International Sustainability Standards Board’s (ISSB) S1 and S2 regime [7], with some UK-specific adjustments following consultation responses. Key changes from the original ISSB standards:
- References to SASB and industry guidance are now optional rather than mandatory.
- There is no fixed effective date; implementation dates will be set through future legislation or regulation.
- Certain reporting reliefs (e.g., climate-only and Scope 3 emissions disclosures) are no longer time-limited.
- Companies using some reliefs can still claim compliance with UK SRS S2 if they disclose their use of those reliefs.
- The standards are explicitly subject to existing UK laws and regulations, including the Companies Act 2006 and FCA rules.
- UK SRS S2 includes additional requirements on financed emissions and incorporates recent ISSB amendments.
2.3 UK Ring-Fencing Review
His Majesty’s Treasury (HMT) published its findings of a ring-fencing review on 18 May 2026. In this instance, ‘ring-fencing’ refers to the separation of investment banking capital and retail banking deposits, as well as respective commercial activities for banks with deposits above GBP 35 billion, which came into effect in 2019. The ring-fencing regime was first introduced by the Financial Services (Banking Reform) Act 2013 and is specifically set out in the amendments to Part 9B of the Financial Services and Markets Act 2000 (FSMA), but it did not fully come into force until 2019. The threshold had been raised to GBP 35 billion from 25 billion after the Smarter Ring-Fencing Reforms, which was secondary legislation brought into force in February 2025. The most recent review is based upon a previous independent review that was published in 2022. The five key proposals from the 2026 review are:
- New Growth Allowance: HMT has proposed a new allowance for otherwise ring-fenced bodies (RFB) to have an allowance to use up to 10% of their ‘Pillar 1’ risk-weighted assets available to act against credit risk. Under this allowance, firms could be able to use the capital for up to a further estimated GBP 80 billion of financing. The parameters of this allowance and their implementation will be discussed and evaluated further in coming consultations with HMT. The RFBs under this arrangement will be able to have a subsequent wider variety of risk management policies to affect this allowance.
- Shift to Secondary Legislation: The proposed reforms will give further power to the HMT to move rules into secondary legislation and, therefore, give the power to amend such rules to the Prudential Regulatory Authority (PRA).
- Review of Capital Requirements for Banks: The PRA and Financial Policy Committee will review how ring-fencing interacts with the Basel 3.1 output floor and the leverage ratio, and the Bank of England will review the calibration of the internal Minimum Requirement for Own Funds and Eligible Liabilities (MREL) scalar for ring-fenced bodies during the second half of 2026.
- Threshold Flexibility: The GBP 35 billion threshold will be reviewed for proportionality and applicability within the market conditions, policy priorities and legislative bounds, every three years such that the threshold remains suitable to the market.
- Fence Flexibility: The review also sets out proposals to evaluate ways in which ring-fencing had been applied too stringently across different banking operations. As such, the review sets out ways in which consultation will occur to further amend the Act and secondary legislation to allow for further sharing of operational resources across banks.
2.4 Bank of England Amends Stablecoin Regulation Proposals
The Bank of England has changed its proposals for a framework for the regulation on stablecoins denominated in sterling. On 22 June 2026, the Bank of England fundamentally amended its proposed mechanism for restriction of stablecoin ownership size and instead changed the regime to a maximum GBP 40 billion issuance threshold. Furthermore, in a sign of its fundamental change in approach, the bank lowered the proportion of assets required to back stablecoin that must be held in zero-interest deposits at the bank. The move was met with positive feedback from industry insiders who had previously disparaged the Bank’s proposed measures for imposing too strict limits on ownership and, regulations more generally, such that the UK would become less attractive as a place for digital asset investment.
2.5 UK Bond Consolidated Tape Launched
In May 2026, the FCA authorised Etrading Software (ETS) as the UK bond consolidated tape provider (CTP). ETS launched the UK Bond CT on 22 June 2026. The CT apparently covers 98% of in-scope bonds traded across UK venues. The CT may affect data pricing models for data aggregators, but this is yet to play out in the UK.
In June 2026, Ediphy, a competitor to ETS, announced plans to launch a consolidated bond tape spanning the EU, UK and US markets. The UK-based fintech had previously secured the EU Bond Consolidated Tape (CT) tender through its fairCT initiative and, on 23 June, unveiled its new platform, Ediphy Connect. The platform integrates data feeds from TRACE, the EU Bond CT, and now the UK Bond CT, creating a comprehensive cross-market data offering. As a result, Ediphy Connect is likely to emerge as a significant competitor to both existing market data providers and ETS.
Disclaimer: The regulatory analysis contained within this article are not legal advice. Any analysis or predictions based on current regulation are therefore subject to legal risk and regulation changes. This is not an exhaustive list of EU and UK financial regulations, but is a collection of relevant updates, material changes and interesting developments according to the team at GreySpark Partners.
[7] The ISSB is a part of the International Financial Reporting Standards (IFRS).
