Financial Services SpeedRead: 7 May 2026 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. ESMA publishes call for evidence on the structure of European equity markets

On 30 April 2026, ESMA published a call for evidence on the market structure of European equity markets, presenting a data-driven analysis of trading trends between 2022 and 2025. The call for evidence responds to concerns about shifts in market structure, including a decline in lit continuous trading and the rise of alternative execution mechanisms. Key points addressed in the call for evidence include:

• the share of addressable liquidity has remained stable at around 85% of total trading volume, with the share of on-book trading compared to off-book trading accounting for approximately 75–80% over the period;
• continuous lit order book trading on regulated markets declined from an average of 35% to 27%, offset by growth in closing auctions, frequent batch auctions (FBAs) and SI trading;
• FBAs doubled their share of trading volume from 3.1% to 6.2%, while SI trading volume (excluding intragroup transactions) rose from 5.4% to 8.9%; and
• ESMA seeks views on the concept of addressable liquidity and possible adjustments to the post-trade transparency flagging framework under RTS 1 (Commission Delegated Regulation (EU) 2017/587).

The consultation closes on 30 June 2026. ESMA expects to publish a feedback statement in the third quarter of 2026.

2. FCA consults on changes to information flows for UK equity IPOs

On 27 April 2026, the FCA published a consultation paper (CP26/14) proposing changes to the rules governing information flows during UK equity initial public offerings (IPOs). The proposals follow the 2023 Investment Research Review and stakeholder feedback that the 2018 IPO information flows reforms, particularly the addition of a ‘7-day delay’ for connected research, have not achieved their intended effect and have added unnecessary market risk and costs for issuers, putting the UK at a competitive disadvantage compared with other listing venues.

The consultation paper proposes the following changes:

• removal of the mandatory seven-day waiting period between publication of an approved registration document or prospectus and connected research, enabling both to be published simultaneously (COBS 11A.1.4FR);
• removal of the requirement that syndicate banks intending to publish connected IPO research share the same information with a range of unconnected analysts as they do with their own research analysts (COBS 11A.1.4BR to COBS 11A.1.4ER);
• correction of a technical drafting error in COBS 12.2.21R relating to restrictions on the review of draft investment research; and
• discussion questions on further reform opportunities, including the timing of the registration document requirement and COBS 12 restrictions on pre-mandate analyst/issuer communications.

The consultation closes on 29 May 2026.

3. FCA publishes multi-firm review on market soundings in UK equity capital markets

On 20 April 2026, the FCA published a multi-firm review analysing the impact of market soundings on market quality in equity capital market transactions in UK listed shares. The review primarily examined 50 accelerated bookbuilds worth approximately £32 billion, conducted by five banks between January 2023 and June 2025. The FCA carried out the review after identifying transactions where a relatively large number of investors were involved in the sounding process.

Key findings of the review include:

• trading volumes fell by an average of 13% during sounding periods, with no material impacts observed on spread, depth or price;
• on average, 33 investors were sounded per transaction, with one instance involving nearly 90; and
• transactions with above-average numbers of sounded investors did not see meaningfully higher overall demand after launch.

The FCA reminded firms that while it does not prescribe limits on the number of market sounding recipients, inside information leakage risk may increase with the scale of a sounding. The FCA will continue to engage with banks and other market participants on market soundings and will consider industry feedback on potential changes to the UK Market Abuse Regulation. For more information, please see our briefing here.

Banking and Prudential

4. EBA publishes response to European Commission consultation on EU banking sector competitiveness

On 17 April 2026, the EBA published its response to the European Commission's targeted consultation on how to strengthen the competitiveness of the EU banking sector. The response builds on the EBA's October 2025 report on the efficiency of the regulatory and supervisory framework, which set out 21 recommendations to simplify the banking rulebook, and emphasises that competitiveness should be enhanced through targeted simplification while maintaining resilience and commitment to Basel III standards.

The EBA's response to the consultation highlights the following key areas:

• the EBA aims to reduce EU harmonised reporting data points by approximately 50% and overall reporting costs by 25%, while integrating stress test data into regular reporting;
• the EBA is reviewing its regulatory framework across priority building blocks, including credit risk, governance and remuneration, ESG, and supervisory processes;
• the EBA is reflecting on the interplay between capital, buffer and maximum distributable amount requirements and the various tiers of own funds and TLAC/MREL (Total Loss-Absorbing Capacity/ Minimum Requirement for Own Funds and Eligible Liabilities); and
• the EBA is exploring a more systematic application of simpler rules for small and non-complex institutions, including a potential expansion of the category.

The proposed reporting changes would apply from September 2027.

Fund Management

No recent updates.

Senior Managers and Governance

5. FCA and PRA publish policy statements on phase one reforms to the Senior Managers and Certification Regime

On 22 April 2026, the FCA and PRA published policy statements (PS26/6 and PS12/26) setting out phase one reforms to the Senior Managers and Certification Regime (SM&CR). The policy statements follow the FCA and PRA consultation papers (CP25/21 and CP18/25), published in July 2025. HMT also published its consultation response on further legislative changes to the SM&CR framework.

The key phase one SM&CR changes confirmed by the regulators include:

• the 12-week rule amended so that firms have 12 weeks to submit a senior management function application, rather than to submit and receive approval;
• the validity period for criminal records checks extended from three to six months, with checks no longer required for internal or intragroup moves;
• firms given up to six months to notify changes to statements of responsibilities and management responsibilities maps;
• removal of overlapping certifications, reducing the total number of certification roles by approximately 15%; and
• a 30% increase in certain enhanced firm thresholds.

Most changes take effect on 24 April 2026, with remaining changes concerning amendments to long and short Form A and Form E taking effect on 10 July 2026. The regulators expect to consult on phase two reforms later in 2026.

Financial Crime

6. FCA publishes Market Watch 85 on information sharing under the Economic Crime and Corporate Transparency Act 2023

On 29 April 2026, the FCA published Market Watch 85, discussing how the Economic Crime and Corporate Transparency Act 2023 (ECCTA) enables firms to share customer information without breaching confidentiality or other civil liabilities in order to help fight economic crime.

In particular, the FCA highlights that the ECCTA:

• applies to any investment firm directly sharing information about criminal market manipulation with another firm;
• covers information about offences under section 89 (misleading statements), section 90 (misleading impressions) and section 91 (misleading statements in relation to benchmarks) of the Financial Services Act 2012; and
• does not currently apply to insider dealing (whether under Part V of the Criminal Justice Act or the civil regime governed by UK MAR).

Firms exercising their rights under the ECCTA must still comply with data protection legislation and their regulatory obligations to submit SARs to the NCA, or STORs to the FCA remain in place. The FCA will continue to assess how firms are sharing information pursuant to the ECCTA rights and any obstacles faced with respect thereto, and will address these through future publications.

Retail Services

7. FCA consults on reviewing the financial promotions rules for consumer credit

On 29 April 2026, the FCA published a consultation paper (CP26/15) reviewing its financial promotions rules for consumer credit in CONC 3, alongside a discussion paper on cost disclosure. The paper proposes removing prescriptive or duplicative rules while relying on firms' Consumer Duty obligations. The consultation follows the FCA's Feedback Statement (FS25/2), in which it committed to reviewing CONC 3 after feedback indicated the rules were overly complex or outdated following the introduction of the Consumer Duty.

The consultation paper proposes the following changes:

• removal of rules and guidance considered duplicative of the Consumer Duty, including on plain language, prominence and comparisons;
• deletion of CONC 3.6, covering financial promotions about credit agreements secured on land;
• removal of the restricted expressions rule (CONC 3.5.12R); and
• amendment of CONC 3.3.11AG to reflect changes made by the Digital Markets, Competition and Consumers Act 2024.

The consultation closes on 17 June 2026. The FCA aims to publish the outcome later in 2026.

8. FCA publishes Final Notice censuring Sapia Partners LLP for client money failures

On 23 April 2026, the FCA published its Final Notice (dated 20 April 2026) censuring Sapia Partners LLP (Sapia) for breaches of Principle 10 and the Client Money Organisational Arrangements Rule in CASS 7 when holding client money for its appointed representative WealthTek (formerly Vertus Asset Management LLP). Sapia has agreed to make a voluntary payment of £19,637,950 to clients of WealthTek LLP (WealthTek).

Between January 2014 and October 2020, Sapia failed to ensure adequate segregation between those making payments from client money accounts and those conducting reconciliations, with both functions carried out by the same WealthTek personnel. During this period, approximately £150 million was deposited into the client money accounts.

The FCA imposed a public censure rather than a financial penalty in light of Sapia's co-operation and the voluntary payment. Separately, WealthTek's former principal partner has been charged with criminal offences including money laundering and fraud, with a trial scheduled for September 2027 at Southwark Crown Court.

Digital Finance and Fintech

9. FCA publishes policy statement on progressing fund tokenisation

On 30 April 2026, the FCA published a policy statement (PS26/7) on progressing fund tokenisation and direct dealing in authorised funds. The policy statement follows CP25/28, in which the FCA proposed new guidance to support firms seeking to launch tokenised authorised funds using distributed ledger technology (DLT), and rules to introduce a new direct dealing model. The FCA received 64 responses, with respondents almost universally supporting the FCA's approach.

Following feedback to CP25/28, the FCA has confirmed the following key changes:

• finalised guidance confirming that an on-chain DLT record of transactions may be considered the primary books and records for unit deals, removing the need for firms to maintain a full 'mirror' off-chain record;
• introduction of an optional direct to fund dealing model, enabling investors to transact directly with the fund through a single-stage issue and cancellation of units model;
• a decision not to proceed with the proposal requiring unattributable payments to be placed in a client money account, replaced by enhanced reconciliation requirements for umbrella cash accounts; and
• amended rules to allow authorised fund managers to deal as principal in units of a fund using the direct to fund model and to use different dealing models within a fund or sub-fund.

The new rules and guidance entered into force on 30 April 2026 with immediate effect.

10. FCA publishes guidance on preparing for the new cryptoasset regulatory regime

On 30 April 2026, the FCA published guidance setting out what cryptoasset firms need to do to prepare for the new FSMA cryptoasset regulatory regime, which commences on 25 October 2027. The new regime requires firms wishing to carry out cryptoasset regulated activities to be authorised by the FCA, with the application period running from 30 September 2026 to 28 February 2027. The FCA has also confirmed that pre-application meetings will be available from 11 May 2026.

The guidance sets out the following key steps for firms:

• Firms should review the new cryptoasset regulated activities, carry out a gap analysis against the expected FSMA requirements and develop a realistic, board-level implementation plan;
• Firms registered under the Money Laundering Regulations should assess what needs to change to meet FCA expectations, including in areas such as market conduct, customer treatment and senior leadership;
• Firms applying outside the application period or submitting poor-quality applications risk delays or refusal of authorisation and, where the firm is an existing cryptoasset firm, the inability to continue carrying on cryptoasset activities when the new regime comes into force; and
• From 11 May 2026, firms can request free pre-application meetings via the FCA's Pre-Application Support Service to discuss their plans before applying.

The FCA will continue to support firms through data requests, direct engagement and targeted support ahead of the authorisation gateway opening.

11. EU Commission publishes newsletter on DLT and tokenisation in financial markets

On 21 April 2026, the EU Commission published a newsletter on the growing role of DLT and tokenisation in financial markets. The newsletter discusses how these technologies could reduce payment and settlement frictions and enable programmability, paving the way for an "internet of value".

Key points addressed in the newsletter include:

• the growing tokenisation of traditional financial instruments is driving demand for tokenised settlement assets or tokenised money denominated in the currency of the underlying instrument;
• the European Central Bank is exploring wholesale central bank digital currency solutions to provide risk-free settlement for tokenised financial transactions;
• the EU Markets in Cryptoassets Regulation (MiCA), fully applicable since December 2024, does not cover tokenised deposits or securities, which remain subject to existing banking and securities legislation; and
• the Commission has proposed extending the duration of the DLT Pilot Regime, which allows market participants to test trading and settlement of tokenised shares, bonds and UCITs under targeted regulatory exemptions, to foster scale and competitiveness.

12. UK Finance publishes insights on digital assets regulatory outlook for 2026

On 21 April 2026, UK Finance published a blog update examining the regulatory outlook for digital assets in the UK and EU for the year ahead. The publication explores how stablecoins and tokenised deposits are emerging as industry priorities as regulation takes shape across both jurisdictions.

The following key developments are highlighted:

• the UK is set to finalise its stablecoin issuers' regime this year, with authorisations opening in September while EU rules under the Markets in Cryptoassets Regulation (MiCA) are already live;
• while stablecoins are not yet covered by UK retail payments regulation, the Government and FCA are expected to consult on payments use cases this year, although changes are unlikely before 2028;
• similar to the US regime, UK banks must issue stablecoins via a separate legal entity, whereas MiCA allows for a simpler issuance process via regulatory notification. UK Finance notes that this raises strategic questions on legal structure, location and launch timings; and
• the Basel Committee's targeted review of the capital treatment of digital assets is due this year, with UK implementation proposals expected in late 2026.

Firms are reminded to monitor regulatory developments as the UK stablecoin authorisation regime opens later this year.

13. FCA publishes speech on supporting fintech innovation

On 21 April 2026, the FCA published a speech delivered by Jessica Rusu – FCA Chief Data, Information and Intelligence Officer – at IFGS during UK FinTech Week. The speech sets out the FCA's plans to support innovation and growth, including the next phase of its AI Lab and new measures to help fintechs scale. Key points addressed in the speech include:

• the FCA is extending its partnership with NVIDIA and Naya One to provide additional computing power and post-programme support;
• a second intake for the Supercharged Sandbox will open on 5 May 2026;
• the FCA does not intend to introduce new AI rules but will publish good and poor practice examples later in 2026; and
• the Open Finance roadmap and Smart Data Accelerator will support the infrastructure needed for agentic commerce.

The FCA's Scale-Up Unit is now open for expressions of interest from solo-regulated firms.

14. HM Treasury publishes consultation response on streamlined approach to payment systems regulation

On 21 April 2026, HM Treasury published its consultation response to its consultation paper published in September 2025, which sought views on proposals to abolish the PSR and transfer its functions to the FCA. The response follows the Government's March 2025 Regulation Action Plan, which set out its ambition to streamline regulation and support growth across financial services.

The consultation response confirms the following key policy decisions:

• HM Treasury intends to proceed with integrating the PSR's functions within the FCA's existing legislative framework;
• the FCA will have statutory objectives equivalent in scope and substance to the PSR's, including promoting competition, innovation and service-user interests;
• the FCA's powers will include the ability to impose price controls or regulate fees in appropriate circumstances; and
• the appeals framework will be simplified, with specific directions made appealable to the High Court rather than the Competition Appeals Tribunal.

The Government will bring forward primary legislation to effect the above when parliamentary time allows. The PSR and FCA continue to take steps to enhance coordination and ensure operational readiness for implementing the integration.

15. HMT publishes policy note on draft statutory instrument amending the cryptoasset regulations

On 21 April 2026, HMT published a policy note and draft statutory instrument proposing amendments to the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (SI 2026/102). The cryptoasset regime was passed in February 2026 and will require firms to be FCA-authorised from October 2027. The amendments aim to provide certainty for stablecoin payment service providers and ensure a competitive UK regime.

The policy note sets out the following key proposals:

• carving UK qualifying stablecoin (UKQS) out of the dealing and arranging regulated activities to remove barriers for stablecoin payment firms ahead of forthcoming payments services reforms;
• clarifying that the temporary settlement exclusion from cryptoasset safeguarding applies only to activity ancillary to dealing or arranging;
• aligning the financial promotions regime so that UKQS-only transactions are excluded, except for lending and borrowing arrangements;
• introducing a proprietary trading exclusion for firms dealing on own account and not providing a client service; and
• extending the existing safeguarding exemption for central securities depositories to cryptoasset safeguarding for specified investment cryptoassets.

Written feedback can be submitted until close of business on 22 May 2026.

Payments

No recent updates.

ESG

16. FCA invites ESG rating providers to join voluntary reporting pilot

On 28 April 2026, the FCA published an update inviting ESG rating providers to join a voluntary pilot to inform future regulatory reporting requirements once the UK ESG ratings regime is live. The pilot supports the FCA's work under Consultation Paper CP25/34: "ESG ratings – Proposed approach to regulation" and aims to assess whether proposed reporting metrics are clear, feasible, proportionate and useful for supervisory purposes. Key points include:

• the pilot is open to all ESG rating providers that expect to be in scope of UK regulation;
• participants will have a direct opportunity to inform the design of the future reporting framework and regulatory reporting requirements;
• the FCA may revise metrics for the eventual reporting regime based on participant feedback;
• data provided as part of the pilot is not intended to inform authorisation assessments; and
• the pilot is based on the content of CP25/34 and does not indicate final policy for the regime.

Interested ESG rating providers should register by 13 May 2026. The FCA will consult on the regulatory reporting regime before it becomes finalised rules in the Handbook.

Other

No recent updates.