The Financial Conduct Authority’s latest Market Watch newsletters spotlighted conduct and reporting priorities with direct implications for investment managers. Market Watch 83 outlined good practices and pitfalls in handling inside information during market soundings, including managing the number of marketing sounding recipients, enforcing gatekeeper controls, standardising deal information, strengthening systems at smaller firms, and tightening personal account dealing oversight. Market Watch 84 reviewed the first year of UK EMIR Refit reporting, noting residual non‑uplifted trades after the transition, weak resource planning, and overreliance on vendors. The FCA signalled higher scrutiny of breach notifications and a 12‑month push to improve data quality via reconciliation, monitoring, and firm engagement.
Beyond surveillance, the FCA opened its 49th Quarterly Consultation (CP25/24), proposing minor changes to the ESG Sourcebook for the sustainability labelling regime and drafting updates to Perimeter Guidance to reflect UK law following the MiFID Org Reg restatement. The consultation also sets a 15 October 2025 deadline for feedback on PERG changes. Separately, the FCA published guidance for authorisation and registration applications that emphasises staffing competence, tailored policies aligned to Consumer Duty, and robust financial resources, while warning against undue reliance on consultants and generic documentation. In enforcement, the FCA reported a two‑year sentence for John Burford after defrauding over 100 investors, underscoring its focus on market integrity and consumer protection.
On technology and markets infrastructure, the FCA outlined its regulatory approach to Artificial Intelligence, pointing firms to existing frameworks such as Consumer Duty and the Senior Managers and Certification Regime, and summarised feedback from Artificial Intelligence Live Testing through the FCA AI Lab. The UK Accelerated Settlement Taskforce updated the T+1 implementation plan ahead of the 11 October 2027 switch, adding guidance for foreign exchange participants to manage partial settlements and funding to curb settlement risk. For digital assets, the FCA’s CP25/25 seeks input on applying FCA Handbook requirements to forthcoming cryptoasset regulated activities, aligning conduct, governance, financial crime, and operational resilience expectations to existing authorised firm standards. The FCA is also consulting on the Consumer Duty, product governance and dispute resolution for crypto firms, with final rules planned for 2026.
At the EU level, ESMA’s 2026 work programme prioritises a single rulebook and supervisory convergence, risk monitoring on leverage, liquidity and interconnectedness, new AIFMD and UCITS guidelines on suspensions by mid‑2026, a report on UCITS and AIFM compliance and audit functions, and a greenwashing project conclusion in late 2026. The ESAs’ annual report on principal adverse impact disclosures under SFDR found general improvements, high PAI consideration among Article 8 and 9 funds, and gaps in entity‑level accessibility and the quality of non‑consideration statements. Recommendations to the European Commission for SFDR 2.0 include streamlined, machine‑readable PAI statements, clearer data coverage disclosure, a proportionality test beyond headcount, and less frequent ESA reporting. The Commission separately clarified that the sustainable finance framework permits investment in the defense sector, highlighted SFDR PAI indicator 14’s scope for controversial weapons, and noted that MiFID II sustainability preferences do not automatically exclude defense. ESMA’s letter to EFRAG on revised ESRS backed simplification while urging a single definition of materiality, retention of impact, risk and opportunity focus, targeted reliefs, robust transition plan disclosures with quantitative effects, and interoperability with ISSB standards.
The ESAs’ Autumn 2025 risk report warned that geopolitical tensions, trade frictions and currency policies are reshaping market risks, advising institutions to embed geopolitical risk, strengthen stress testing, bolster cyber risk management and monitor growing crypto linkages. ESMA also published national authority compliance tables for MiCA guidelines on cryptoasset transfer services, reverse solicitation and suitability and periodic statements for portfolio management.
