Legal development

Financial Services SpeedRead: 23 October 2026

October 23, 2026

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 updates its manual on pre-trade and post-trade transparency

On 15 October 2026, the European Securities and Markets Authority (ESMA) updated its Manual on pre-trade and post-trade transparency under MiFID II/MiFIR to provide further guidance on OTC derivatives transparency and the tick-size regime.

The Manual is a Level 3 convergence tool promoting common supervisory approaches to pre-trade and post-trade transparency. This update follows the adoption, on 13 July 2025, of a Commission Regulation amending the MiFIR transparency technical standards for non-equity instruments and the technical standards on input and output data for the derivatives consolidated tape. The amending act requires OTC derivatives subject to transparency to be identified in accordance with Commission Delegated Regulation (EU) 2025/1003.

The updated Manual clarifies how identifying reference data for OTC derivatives should be provided for transparency purposes. It introduces two new fields (effective date and expiry date) to support consistency in data reported to and published through the consolidated tape. It also incorporates Questions and Answers on the tick-size regime and adds recommendations on its application, including when trading venues and national competent authorities may intervene.

The guidance on OTC identifying reference data is considered a draft until the entry into force of the related technical standards amending the MiFIR transparency framework and the standards on derivatives consolidated tape data.

2. FCA publishes multi-firm review on governance in the benchmarks sector

On 12 October 2026, the FCA published a multi-firm review examining governance arrangements at a sample of benchmark administrators. The review is the final part of supervisory work following the FCA's 2024 portfolio letter, which identified weaknesses in governance, management information and risk frameworks at some firms.

The five key conclusions of the review were:

firms should consider whether their boards have the right collective skills in core areas, with a breadth of perspective and independent input;
boards should ensure meetings and agendas are proportionate and clearly recorded;
a wide variety of governance structures are appropriate, as long as processes and conflicts are carefully considered;
board reporting has improved but firms should consider indicating priorities in their reporting and simplifying areas that do not inform decisions; and
governance outcomes and structures should be subject to continuous review and improvement.

The FCA will use its findings to inform supervisory engagement with benchmark administrators.

Banking and Prudential

3. PRA and FCA publish joint statement on high loan to income lending

On 14 October 2026, the PRA and FCA published a joint policy statement (PS19/26) amending the high loan to income (LTI) flow limit. This policy statement follows a July 2025 recommendation from the Financial Policy Committee that the limit be amended, in order to allow individual lenders to increase their share of lending at high LTI ratios.

Following feedback to a consultation paper on the topic (CP6/26), the regulators have confirmed the following changes:

the firm-specific 15% cap on high LTI lending is removed, allowing individual lenders to exceed the cap provided the aggregate flow remains consistent with the 15% limit; and
further advances and retirement interest-only mortgages are excluded from the LTI flow limit.

The changes come into force on 28 October 2026. The PRA will publish the aggregate high LTI flow quarterly, alongside additional data on mortgage completions in scope.

4. EBA publishes final report on amendments to prudential requirements for CSDs

On 9 October 2026, the EBA published its final report with draft regulatory technical standards (RTS) amending the Delegated Regulation on prudential requirements for central securities depositories (CSDs) and designated credit institutions offering banking-type ancillary services, to reflect the Central Securities Depositories Regulation (CSDR) Refit. This made targeted amendments to the CSDR to improve the efficiency of EU securities settlement, including in relation to banking-type ancillary services.

The RTS address new intraday credit, liquidity and concentration risks where banking CSDs provide banking-type ancillary services to participants of other CSDs, and align elements of the RTS capital framework with the Capital Requirements Regulation (CRR).

Key points include:

new requirements for designated CSD-banking service providers to gather information on participants of “designating” CSDs, identify material interdependencies and extend intraday credit and liquidity risk monitoring to these exposures;
a harmonised methodology for the intraday credit capital surcharge, based on the average of the five highest intraday “peak exposures” after CRR haircuts, and updated methodologies for other risks; and
clarification that a participant of a designating CSD that is also a direct participant in the designated CSD may use a single cash account there, and that designated CSDs need only notify their competent authority when providing cash settlement to participants of a designating CSD.

The RTS text is attached to the final report as a draft Commission delegated regulation, which will be submitted to the European Commission for endorsement and will enter into force on the 20th day following its publication in the Official Journal.

Fund Management

5. FCA consults on fair redemption terms for authorised funds investing in illiquid assets

On 8 October 2026, the FCA published a consultation paper (CP26/35) proposing minimum redemption terms for non-UCITS retail scheme (NURS) funds that are predominantly invested in inherently illiquid assets.

The proposals follow the FCA's paused 2020 consultation (CP20/15) on notice periods for authorised property funds. The scope of the new consultation has been broadened beyond real estate to all inherently illiquid assets.

The consultation paper proposes the following key changes:

amending the definition of a fund investing in inherently illiquid assets (FIIA) to only consider whether a fund has over 50% of its value in inherently illiquid assets;
restricting FIIAs to one dealing day per month for redemptions;
requiring FIIAs to impose a 90-day notice period for redemption requests; and
permitting the manager of any NURS fund to introduce limited redemption arrangements where appropriate.

The consultation closes on 11 December 2026. The FCA expects to publish final rules in the first half of 2027. Existing funds would have two years to comply, and would have to give investors one year's notice.

Senior Managers and Governance

No recent updates.

Financial Crime

6. ESMA publishes Report on delay in the disclosure of inside information

On 16 October 2026, ESMA published its final report on the revised Market Abuse Regulation (MAR) guidelines on delay in the disclosure of inside information, completing the updated regulatory framework.

These guidelines help issuers in their decision to delay disclosure by providing a non-exhaustive list of legitimate interests that could justify such delay. ESMA has identified five additional legitimate interests for delaying disclosures, covering the following situations:

where the issuer is requested not to disclose information by a public authority;
where the issuer needs to collect additional information to enable a correct assessment of inside information by market participants;
where the issuer may risk the loss of a business opportunity following the disclosure of sensitive commercial information;
where the appointment of a member of the issuer’s governing body or a manager holding a key position could be jeopardised;
where the disclosure of inside information concerning companies within the same group could cause a direct prejudice to the issuer and undermine the effectiveness of the delay applied by another company.

Since June 2026, issuers are no longer required to immediately disclose inside information related to protracted processes before their completion. As such, ESMA has removed from the current guidelines the legitimate interests for delayed disclosure connected to these processes.

The revised guidelines will apply from the date of publication on ESMA's website in all EU official languages.

7. FCA publishes Market Watch 86 on market abuse surveillance

On 14 October 2026, the FCA published Market Watch 86, sharing observations from supervisory visits to a handful of UK retail brokerage firms on the effectiveness of their market abuse surveillance arrangements.

The FCA assessed firms' arrangements for detecting and reporting potential insider dealing under the UK Market Abuse Regulation. The FCA identified material weaknesses in how surveillance arrangements had been designed, implemented and operated, and required all firms to take remedial action. Key findings include:

several firms set the threshold for reasonable suspicion too high, with procedures steering analysts to close alerts rather than weigh aggravating and mitigating factors;
alert calibrations were not suitably tailored, with some firms using flat price thresholds irrespective of stock volatility or setting minimum notional trade values too high;
approaches to quality assurance varied significantly, from comprehensive reviews to limited or no formal processes; and
some firms' market abuse risk assessments did not consider all relevant business characteristics, mistakenly treating the existence of an alert as evidence of effective control.

The FCA will continue to assess firms' surveillance controls, with market abuse at retail brokers remaining a supervisory priority.

Retail Services

8. FCA publishes feedback statement on expanding consumer access to investments

On 16 October 2026, the FCA published a Feedback Statement (FS26/3) summarising responses to Discussion Paper DP25/3 on how its rules and regulatory framework can better support a stronger investment culture for consumers investing without an adviser.

The discussion paper, published in December 2025, sought views on helping more people invest with confidence while maintaining appropriate protections for higher-risk products. Respondents broadly highlighted inconsistencies in how financial promotion rules treat investments with similar risks. For further details on the previous Discussion Paper, please see our previous Financial Services SpeedRead here.

The feedback statement sets out the following key points:

the FCA will review its financial promotion rules for high-risk investments, including whether products with similar risks are categorised consistently;
the FCA plans to consult in early 2027 on changes to rules and guidance on risk information for mainstream investments;
the FCA will review how the appropriateness assessment works in practice, with stakeholder engagement planned for 2027; and
the FCA has begun a multi-firm review of model portfolio services, with findings expected by Q1 2027.

The FCA will prioritise areas where it can make the greatest difference to consumers while giving firms time to prepare for change.

9. FCA publishes good and poor practice on CFD firms

On 15 October 2026, the FCA published a good and poor practice document on contracts for difference (CFD) firms' compliance with Consumer Duty price and fair value obligations. The publication follows a May 2026 survey of 81 CFD firms, assessing changes made since the FCA's November 2025 multi-firm review.

While most firms had made or planned changes, many were minor and had not fundamentally altered firms' provision of price and value. Key areas of concern set out in the publication include:

overnight funding charges may not be consistent with price and fair value obligations, particularly where charges appear high relative to prevailing base rates and peer comparisons;
fair value assessments should focus on consumer outcomes rather than serving as a tick-box compliance exercise;
client disclosures about charges remain insufficiently prominent in the client journey; and
firms permitting matched or hedged positions should provide clients with a clear, balanced view of associated costs.

The FCA expects firms to review their charges and will follow up with individual firms where concerns remain.

Digital Finance and Fintech

10. Government publishes the Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2026

On 13 October 2026, the Government published the draft Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2026 (the Regulations). These Regulations would expand the scope of the Financial Market Infrastructure (FMI) Sandbox powers under the Financial Services and Markets Act 2023.

The Regulations would amend section 17(3) of the Financial Services and Markets Act 2023 to add 10 enactments to the list of legislation that HMT may temporarily modify for FMI Sandbox purposes. This would support the Digital Securities Sandbox (DSS), which enables firms to test digital securities infrastructure using developing technology such as distributed ledger technology. The expansion follows the Government's Mansion House announcement in July 2026 of its intention to issue DIGIT, a digitally native government debt instrument, onto a DSS platform by the end of Q1 2027. For further details, see the entry on the DIGIT pilot below.

If approved by the House of Commons, the Regulations will come into force on the day after the day they are made.

11. ESMA publishes opinion on crypto-asset services in relation to non-MiCA-compliant stablecoins

On 8 October 2026, ESMA published an opinion clarifying supervisory expectations for crypto-asset services involving asset-referenced tokens and e-money tokens that do not comply with the Markets in Crypto-Assets Regulation (MiCA). The opinion builds on earlier guidance surrounding MiCA, including European Commission Q&A 2404 which established where crypto-asset services may constitute certain regulated activities.

The opinion states that crypto-asset service providers authorised under MiCA should stop providing services related to stablecoins that do not comply with MiCA to EU clients. This prohibition covers all crypto-asset services under MiCA. Providers should also put sufficient controls in place to prevent the availability of non-MiCA-compliant stablecoins.

ESMA expects that national authorities will supervise providers to ensure they comply with this opinion. Where national authorities identify pre-existing exposures, they should require remediation as soon as possible, and in any event no later than 8 January 2027. Strictly limited residual services may be permitted solely to facilitate orderly wind-down of existing holdings.

12. HMT announces appointment of Joint Lead Managers for Digital Gilt Instrument pilot

On 6 October 2026, HMT announced that Barclays, HSBC, Lloyds, Morgan Stanley, NatWest and RBC Capital Markets have been appointed as Joint Lead Managers for the Digital Gilt Instrument (DIGIT) pilot, the UK's first digitally native government bond. The appointment of Lead Managers completes the procurement process for the DIGIT pilot and will support investor engagement ahead of the issuance. The Lead Managers will provide traditional lead manager services, including underwriting, supporting investor engagement and distributing DIGIT on issuance day.

The DIGIT pilot, which is expected to take place by Q1 2027, will test how distributed ledger technology can be applied across the issuance and lifecycle of a UK sovereign bond, including on-chain settlement, using a platform operating within the Digital Securities Sandbox. DIGIT will be digitally native, short-dated and independent of the Government's main debt management programme, and is intended to support the Government's broader strategy to digitalise wholesale financial markets and position the UK as a global hub for digital assets.

Payments

13. PSR consults on regulatory framework for access to payment systems

On 15 October 2026, the Payment Systems Regulator (PSR) published a consultation paper (CP26/3) setting out proposals for a simplified regulatory framework for access to payment systems. The consultation follows HMT's confirmation that it will abolish the PSR and consolidate its functions within the FCA, as provided for in the Financial Services and Markets Bill 2026-27. The PSR proposes to maintain existing requirements within a single streamlined framework.

CP26/3 sets out the following key proposals:

a revised General Direction 2 introducing a single proportionate, objective and non-discriminatory access test for both direct and indirect access across all regulated payment systems;
the revocation of General Direction 3, which becomes redundant once HMT revokes regulations 103 and 104 of the Payment Services Regulations 2017;
an extension of the obligation to publicly disclose access requirements to all operators of regulated payment systems; and
revised indicative timelines for access applications, increasing to six months for straightforward cases and up to 12 months for complex cases.

The consultation closes on 10 December 2026.

ESG

14. ESMA publishes thematic notes on sustainability-related impact and transition claims

On 12 October 2026, ESMA published two thematic notes on sustainability-related claims, the third and fourth in its wider series aimed at addressing greenwashing risks in financial markets. The notes follow previous publications on ESG credentials and ESG strategies and do not create new regulatory requirements. They provide practical do's and don'ts, illustrated through examples of good and poor observed market practices, to support market participants in meeting existing expectations under the principle of clear, fair and not misleading communication.

The thematic notes set out the following key expectations for market participants:

when making impact claims, market participants should clearly explain intentionality, additionality and measurability, and distinguish between investee impact and investor impact;
for climate transition claims, market participants should clearly communicate the transition ambition, implementation strategy and how progress will be assessed and reported;
market participants should avoid relying on broad aspirational statements, exclusion-based screening or generic ESG metrics as substitutes for impact or transition-specific criteria; and
sustainability claims should be accurate, accessible, substantiated and up to date, with limitations in data and methodologies clearly disclosed.

Other