Financial Services SpeedRead: 3 December 2025 edition

Welcome to the latest edition of the Financial Services SpeedRead, a collection of bite-sized updates designed to help you keep on top of key regulatory developments in financial services over the preceding fortnight.  Please get in touch if you want to explore any of the topics covered in this fortnight's edition of Financial Services SpeedRead in more detail.

Financial Markets

1. EU Commission publishes a regulation amending MiFIR post-reform changes

On 24 November 2025, the EU Commission adopted Commission Delegated Regulation amending Delegated Regulation (EU) 2017/567 (supplementing the Markets in Financial Instruments Regulation (MiFIR)) with regards to equity transparency. The EU Commission also published the annex to the draft regulation. 

In summary, the MiFIR reform removed barriers to the creation of three consolidated tape providers and enhanced market transparency and competitiveness. Given the changes introduced by the MiFIR reform, this delegated act updates requirements in Delegated Regulation (EU) 2017/567 and deletes provisions that became redundant in that act.

Therefore, the objectives of the draft regulation are to:

• amend the provisions relating to the determination of what constitutes a "liquid market" for equity instruments for the purposes of Articles 4, 5 and 14 of MiFIR and clarify certain other issues around the liquidity assessment for equity instruments;
• delete provisions that clarify what constitutes a "reasonable commercial basis" for trading venues and systematic internalisers;
• delete provisions which specify the size related to the financial instrument for the purposes of the requirements applicable to systematic internalisers in respect of non-equity instruments;
• specify what constitutes post-trade risk reduction services for the purposes of the exemption in Article 31(1) of MiFIR; and
• delete publication requirements for portfolio compression services.

The draft regulation shall enter into force on the third day following its publication in the Official Journal of the EU. 

2. Government publishes statutory instrument on ancillary activities exemption

On 19 November 2025, HMT laid before Parliament Statutory Instrument 2025/1205. The Order amends the RAO to allow the FCA to set rules determining when firms trading in commodity derivatives and emissions allowances need authorisation. The objective is to introduce a simpler, more proportionate regime providing greater legal certainty. 

Key amendments are as follows: 

• the scope of the ancillary activities exemption is extended to include an annual threshold determined by the FCA;
• the FCA is granted a rule-making power to determine both the criteria for the ancillary activities test and an annual threshold; and
• the statutory instrument includes a staged revocation of the existing Article 72J RAO exemption with 12 months of transitional relief.

3. FCA publishes consultation paper on framework for a UK equity consolidated tape

On 19 November 2025, the FCA published a consultation paper (CP25/31) on the framework for a UK equity consolidated tape (CT), run by a Consolidated Tape Provider (CTP). The publication forms part of the FCA's 2025-2030 Strategy, and the proposed rules establish the main regulatory obligations of the equity CTP and main regulatory requirements for the operation of the CT. 

The proposed rules aim to establish a single equity CTP via tender process. The CTP, appointed via a procurement process for a five‑year term, is to publish both post‑trade data and the attributed pre‑trade best bid and offer from lit UK venues, distributed with a latency of 100-200 milliseconds (referred to as Scenario 2).

Further, the proposed framework would require data contributors to provide data to the equity CTP without charge, including regulatory data on the status of financial instruments and trading systems. The FCA also proposed to set input and output tables for pre-trade data for the CTP.

The proposals will apply to: 

• trading venues which facilitate the trading of equities; 
• APAs who publish trade reports for over-the-counter (OTC) equity trades; and
• firms interested in becoming an equity CTP.  

The consultation closes on 30 January 2026. The FCA targets policy finalisation in 2026 and CT operation in 2027. 

Further, on the same date, the FCA published a webpage inviting engagement with prospective providers of an equity CT, or suppliers of technology to be used to deliver the FCA's proposal to introduce a CT for the equities market. The FCA invited expressions of interest in discussing the cost and other design factors of the equity CT from suppliers with relevant expertise via its Procurement inbox by 30 January 2026.

4. FCA publishes Dear Compliance Officer letter on T+1 securities settlement 

On 18 November 2025, the FCA published a "Dear Compliance Officer" letter. This supplements previous FCA guidance on T+1 settlement set out in our previous Financial Services SpeedRead (here).

The FCA sets out the following expectations:

• By the end of 2025, all firms should familiarise themselves with the recommendations in the AST Final Report and put in place a project plan to move to T+1 settlement by October 2027. Firms should contact their settlement agent(s) to discuss what changes they may require to make in order to settle transactions within a T+1 settlement cycle.
• By the end of 2026, firms will need to have implemented the identified changes.
• In 2027, the FCA expects all firms to be testing (both internally and with any external parties) their amended settlement processes to ensure they are ready to settle on a T+1 basis from 11 October 2027.

5. FCA publishes consultation paper on UK transaction reporting regime

On 21 November 2025, the FCA published a consultation paper (CP25/32) on improving the UK transaction reporting regime. The proposals aim to reduce the regulatory burden on firms, support continued economic growth in the UK, strengthen the FCA's ability to combat financial crime and protect market integrity. The consultation paper follows an earlier Discussion Paper (DP24/2) and HMT’s intention to repeal the onshored MiFIR firm facing provisions, enabling new FCA rules in MAR. The FCA estimates ongoing annual savings for firms of over £100 million.

The FCA's proposals include:

• reducing the number of transaction reporting fields from 65 to 52, and the number of instrument reference data fields from 48 to 37;
• removing reporting obligations for 6 million financial instruments which are only tradeable on EU trading venues;
• removing foreign exchange (FX) derivatives from the scope of reporting requirements;
• reducing the default back reporting period from 5 to 3 years;
• requiring trading venues to populate fewer fields in their transaction reports; and
• removing the obligation on systematic internalisers to submit instrument reference data. 

The consultation paper closes on 20 February 2026. The FCA plans to publish a policy statement in the second half of 2026 and expects an implementation period of around 18 months after publication.

Banking and Prudential

6. BoE publishes policy statement on margin requirements for non-centrally cleared derivatives

On 27 November 2025, the BoE published an FCA and PRA policy statement on margin requirements for non-centrally cleared derivates. The policy followed the FCA and PRA consultation paper (CP5/25) and also contains the PRA's and FCA's final policy amending the Binding Technical Standards (BTS). 

Key changes will include: 

• introducing an indefinite exemption from UK bilateral margin requirements for single‑stock equity options and index options; 
• removing the requirement to exchange initial margin (IM) on legacy contracts once a counterparty falls below the in‑scope thresholds; and 
• permitting UK firms to use another jurisdiction's threshold assessment calculation periods and entry into scope dates to determine whether those transactions are subject to certain IM requirements, when transacting with a counterparty subjected to the margin requirements in that jurisdiction. 

The amendments to the BTS will be effective on 27 November 2025. 

7. PRA publishes policy statement amending the limits under the Financial Services Compensation Scheme

On 18 November 2025, the PRA published a policy statement (PS24/25) on depositor protection, containing the final rules on the limits for deposit protection available from the Financial Services Compensation Scheme (FSCS). The publication is relevant to: PRA-authorised UK banks, building societies and credit unions; overseas firms with permission to accept deposits where the deposits are held by a UK branch or subsidiary of the firm; the FSCS; and depositors.

The policy confirmed an increase to the limit for FSCS deposit protection to £120,000. This increases the limit from the current £85,000, which was set in 2017. The policy also increased the limit for temporary high balances (THB) from £1 million to £1.4 million. 

The increased deposit protection and THB limits will apply from 1 December 2025. The updated versions of SS18/15 and SoP1/15 will also apply from 1 December 2025.

Deposit takers are expected to update disclosure materials and deposit compensation information by the end of May 2026.

8. FSB publishes practices paper on the operationalisation of transfer tools

On 17 November 2025, the Financial Stability Board published a practices paper on operationalising transfer tools in bank resolution. 

The paper:

• sets out how authorities operationalise whole-bank and partial transfers, starting with the definition of the transfer perimeter;
• outlines arrangements for operational continuity, such as transitional service agreements and management of third party contracts, and approaches to marketing the transfer perimeter under tight timelines and confidentiality;
• explains how loss absorption, in line with the creditor hierarchy, is ensured via write-down and conversion or an estate claims process liquidating the residual entity; and
• describes the establishment and operation of bridge entities and highlights key challenges for cross-border execution of transfer tools.

9. ECB publishes Assessment of the Supervisory Review and Evaluation Process

On 18 November 2025, the ECB published its annual Supervisory Review and Evaluation Process (SREP) outcomes for 105 directly supervised banks. The ECB highlighted continued strength in banks’ capital, liquidity and profitability.

Key findings in the SREP include that:

• overall Common Equity Tier 1 (CET1) capital requirement and guidance remain broadly stable at 11.2%;
• CET1 Pillar 2 requirements (P2R) that banks need to meet in 2026 remained broadly stable at 1.2% of risk-weighted assets;
• the non-binding Pillar 2 Guidance (P2G), which is informed by the 2025 EU-wide stress test and applies in 2026, decreased from 1.3% to 1.1% (CET1);
• the combined buffer requirement is slightly higher owing to increased countercyclical capital buffer applicable in some countries;
• qualitative measures primarily target credit risk, governance and capital adequacy, with intensified supervisory follow-up on remediation by banks;

On the same date, the ECB also published a revised Internal Capital Adequacy Assessment Process methodology. This methodology evaluates, among other things, a bank's internal processes to ensure it has sufficient capital to cover material risks and maintain adequate risk management practices. A simplified P2R calculation methodology will take effect in 2026.  

Senior Managers and Governance

No new entries

Financial Crime

No new entries

Digital Finance and Fintech

10. AI Act: what it means for EU banks and payment firms

On 21 November 2025, the EBA published its factsheet on how the EU AI Act (in force since August 2024) applies to banking and payments, focusing on high risk AI used for creditworthiness assessments and credit scoring. It summarises the EBA’s 2025 mapping of AI Act obligations against the existing EU financial services rules, and outlines supervisory coordination and next steps.

Key points from the factsheet:

• High risk designation for credit scoring: AI used to assess individuals’ creditworthiness or set credit scores is classified as high risk, triggering additional safeguards under the AI Act.
• Role based obligations: the scope of requirements applying to financial institutions depends, among others, on whether they develop the AI systems in-house (they are both providers and deployers of the AI system) or the AI system used is developed by a third-party provider (the financial institution is only a deployer).
• Regulatory fit and synergies: the EBA finds no significant contradictions between the AI Act and EU banking and payment legislation. The AI Act is largely complementary, with targeted derogations/synergies to avoid duplication.
• Supervisory cooperation: co existence of prudential/conduct supervisors and Market Surveillance Authorities calls for a common supervisory approach.

By 2 February 2026, the European Commission will issue guidelines on classifying high risk use cases, including practical examples. Through 2026–2027, the EBA will support implementation by promoting a common supervisory approach, working with national authorities, providing input to the AI Office and engaging in the AI Board’s Financial Services Subgroup.

Payments

11. EU Parliament and EU Council publish press release announcing payment services deal

On 27 November 2025, the EU Parliament published a press release on payment services deal between the EU Parliament and Council covering a new Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3). The European Commission also published a related press release highlighting the EU focus on bolstering the EU's legislation on payment services. 

Key proposals include:

• Protecting customers from fraud: the package strengthens fraud protection by making payment service providers (PSPs) liable if they fail to implement adequate fraud prevention mechanisms. For example, PSPs would need to have name/identifier checks, strong customer authentication, risk assessments, spending limits, and freezing suspicious transactions.
• Transparent charges: the deal mandates transparent charges, including clear currency conversion and ATM fee information.
• Better access to cash: it improves access to cash by allowing retail cash withdrawals of between €100 to €150 without a purchase.
• Simplified authorisation: authorisation for PSPs is simplified, with strong prudential rules and streamlined paths for MiCA-authorised crypto asset service providers.
• Quick dispute resolutions: all PSPs must join alternative dispute resolution schemes.

The deal needs to be formally adopted by the Parliament and Council before it can come into force.

12. PSR publishes compliance report on Confirmation of Payee

On 17 November 2025, the Payment Systems Regulator (PSR) published a compliance report on the rollout of the Confirmation of Payee (CoP) name checking service under specific direction 17. The CoP service is intended to prevent misdirected and fraudulent payments.

The PSR confirmed that over 99% of organisations initiating 'Faster Payments' transactions in the UK now offer CoP checks, with over 320 organisations offering checks and over 2 million checks completed daily. The report details phased compliance across Group 1 and Group 2 Payment Service Providers (PSPs), targeted supervisory actions, and ongoing enforcement where firms missed deadlines.

In summary, three enforcement investigations have been opened for Group 2 (in addition to one ongoing case from Group 1). The PSR expects open, proactive engagement and readiness before launching new services, and it will continue monitoring and intervening as needed.

ESG

13. EU Commission publishes a proposal for a regulation to amend existing SFDR regime

On 20 November 2025, the EU Commission published a proposal for a regulation of the European Parliament and Council to amend Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR). The SFDR was adopted in November 2019 and has been in application since March 2021.

Key elements of this proposal include (among other things): 

• Categorisation system: the proposal features a categorisation system for financial products making ESG claims based on three categories: Sustainable, Transition, and ESG basics. 
• Simplified disclosure: the European Commission has proposed deleting entity-level disclosure requirements for financial market participants regarding principal adverse impact indicators.
• Naming and marketing communications: only categorised products will be able to use sustainability-related terms in the product names and marketing communications. 

For further detail on the amendments, including implementation timing, please see our Ashurst briefing here. 

Other

14. Australian Federal Parliament publishes Bill on Foreign Financial Services Providers

On 26 November 2025, the Federal Parliament published an amendment introducing new licensing exemptions for foreign financial services providers (FFSPs). 

FFSPs have for 20 years been able to rely on a number of exemptions to service wholesale clients / professional investors in the Australian market. There have been long-standing exemptions issued by Australian Securities & Investments Commission (ASIC) covering, for example:

• Limited connection exemption: where the FFSP has no presence in Australia;
• Sufficient equivalence exemption: where the FFSP is regulated by a regulator assessed by ASIC as equivalent (e.g. the UK FCA), with ASIC filings required to rely on this exemption; and
• Professional investor exemption: where the FFSP is providing services related to derivatives or foreign exchange (FX).

The new Bill aligns with the previous version, which lapsed when the Federal election was called earlier in 2025. If passed, it will introduce three new exemptions for FFSPs: 

• Professional investor exemption: expanded to cover all financial products (not just derivatives and FX); 
• Comparable regulator exemption: similar to the present sufficient equivalence exemption, but with different conditions; and
• Market maker exemption: new altogether.

These exemptions will replace the ASIC exemptions, which are expected to expire on 31 March 2026. For more information, please see our briefing here.

Other authors: Zhuan Faraj, Associate; Khadija Patel, Solicitor.