President Trump signed an Executive Order to establish a strategic Bitcoin reserve and US digital asset stockpile. The full update can be found here on our US Regulatory Intelligence platform.

In our EMEA regulatory insights series colleagues from our EMEA offices provide an update on some of the key regulatory issues they are seeing in their local market. In this latest episode Karl Masi and Hasanali Pirbhai from our Dubai office provide a regulatory update for the UAE. This includes the FATF’s onsite assessment this year, current themes in DFSA supervision, the virtual asset framework and a new consultation on commodity tokens and securities tokens. Listen to the podcast here.

On 12 March 2025, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) provided an update on their diversity and inclusion plans in a joint statement on both the FCA and PRA websites. The regulators confirmed that, following their 2023 consultations on proposed rules and expectations aimed at improving diversity and inclusion in regulated firms, they have no plans to take the work further. This is in light of the broad range of feedback received (including the recommendations in the ‘Sexism and the City’ report published by the Treasury Committee in the last Parliament), as well as expected legislative developments and to avoid additional burdens on firms. In letters to the Treasury Select Committee (the Committee), FCA CEO Nikhil Rathi and PRA Deputy Governor and CEO, Sam Woods provided further detail, including: The majority of respondents to the consultation agreed that regulators have a role to play in diversity and inclusion. There were, however, reservations expressed about the reporting and data collection aspects of the proposals. There is a very active policy and legislative agenda, including on employment rights, gender action plans and disability and ethnicity pay gap reporting, and a lot of respondents wanted the regulators to align their regulatory approaches with those initiatives to avoid duplication and unnecessary costs. As a result, the regulators have decided not to publish new rules on diversity and inclusion at this time and will not reconsider them until after any new legislation in this area has been substantively implemented. They will continue to support voluntary industry initiatives instead.

On 11 March 2025, the Payment Systems Regulator (PSR) published a policy statement, PS25/3, on the publication of 2024 authorised push payment (APP) scams data. Background The PSR began collecting and publishing data on APP scams in March 2023, as part of its broader efforts to tackle fraud. It published annual data in October 2023 and August 2024 and subsequently, in October 2024, the PSR’s new reimbursement policy was introduced to ensure victims of APP scams are reimbursed in all but exceptional cases. Policy statement Given the introduction of the reimbursement requirement, the PSR proposes to publish two reports for 2024, as data before and after the policy went live cannot be directly compared. As the reimbursement policy becomes fully embedded, the PSR has also taken the opportunity to review how it can continue to shine a light on APP scams. It plans to to carry out a call for views in spring 2025, where it will engage with stakeholders to ensure that its future reporting aligns with consumer needs, regulatory requirements, and the PSR’s commitment to transparency. PS25/3 outlines the PSR’s approach to publishing APP scams data for 2024 and includes its considerations for future reporting.

On 12 March 2025, the Government announced that it intends to abolish the Payment Systems Regulator (PSR), as part of its plan to reduce regulation. Plans for the PSR Under the plans, the PSR will mainly be consolidated into the Financial Conduct Authority (FCA), with the aim of making it easier for firms to deal with one port of call. The announcement follows complaints from businesses that the regulatory environment was too complex, with payment system firms having to engage with three different regulators which has implications in terms of time, money and resource. The Government is concerned that this has a greater impact on smaller businesses that are trying to scale and grow, as the costs are disproportionately higher for them, and through its planned changes it aims to streamline the regulatory process. The Government confirms that there will be no immediate changes to the PSR’s remit or ongoing programme of work, and that the PSR will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes. In the meantime, the PSR and FCA will “work closely to deliver a smooth transition of responsibilities to ensure the market remains competitive”. Further detail on the plans are set out in a letter from the Economic Secretary to the Treasury to the Treasury Committee, which notes that the Government will consult on the detail of this proposal during Summer 2025 and will legislate “as soon as possible”. Wider changes The announcement also flags that the entire regulatory landscape will continue to be reviewed and finessed as part of a wider Government effort to “kickstart economic growth and make regulators work for the country, rather than block progress”. PSR response The PSR has published its response to the announcement, noting that it is a “pragmatic next step in simplifying and clarifying payments regulation” and welcoming the Government’s commitment to maintaining effective regulation of payment systems, which it says was a gap before the PSR was established. The statement highlights the central role played by the PSR in supporting open banking and innovation, opening up access to payment systems, promoting competition, and introducing world leading protections for victims of fraud. The PSR confirms that it is committed to working with Government, the FCA and the Bank of England as decisions are taken on the transfer of regulatory responsibilities and, when they are, help ensure the process is smooth. It flags recent work to bring the PSR and FCA closer together, including joining the roles of PSR managing director and FCA executive director of payments and digital finance. It also commits to continue ensuring payment systems are competitive, innovative and safe until the transfer of responsibilities takes place. FCA response In its own response to the announcement, FCA CEO Nikhil Rathi acknowledges the PSR’s work which has made payment systems “safer, more competitive and increasingly innovative”, and explains that now is the right time to put in place a more streamlined regulatory framework. He notes that this is a “natural next step” following recent work to improve co-ordination and clarity on regulatory responsibilities. Mr Rathi commits to working closely with the Government, Bank of England and the payment sector as the details of the change are decided and to ensure a smooth transfer of any powers. In the meantime, he confirms that the FCA will drive forward with change, including “welcoming the deep expertise of PSR colleagues within the FCA”.

Dear CEO – FCA looks to private markets in asset management letter The FCA appears to be using Dear CEO letters quite liberally at the moment. There have been two most recently addressed to:  Wholesale brokers; and,  Asset managers. On the latter, this letter marks an interesting shift in the FCA’s focus towards private funds. Whilst not new, this represents a doubling down on the concerns around the risks arising from the growth of the sector. In this context, the change in quantum balance between listed and private funds in their various forms speaks for itself when one looks at the quants. I think that the overarching message is that this area will no longer be viewed as less important for regulators due to the systemic risks posed. It is worth noting, as always, that it is as much about ‘reading between the lines’ as it is ‘reading the lines’ and I wanted to bring out a few key points below. Private Markets The first priority relates to the general concerns around valuation. The FCA has since published its findings regarding its multi-firm review of the valuation process for private market assets, coupled with commentary. We have published a short summary of the review here. In my view, the big message for firms working in the private equity and broader private assets market is that the FCA is demanding a new level of governance around all aspects of the valuation process. I think that this ranges from the substantive question of how the methodology and consistency of valuation (and alternative approaches) takes place within a firm, through to all of the normal procedural questions surrounding governance. There is clearly a particular focus on conflicts of interest. As those of us working in this area are aware, those questions are easier posed than answered. For example, the role of the front office in giving expert views that feed into the process, versus the role of senior management and that of technical experts, all need to be factored in. I think that a thorough look at a firm’s three lines of defence model will be an important action point for these purposes. As always with the FCA, the old adage that ‘if it isn’t written down, then it doesn’t exist’ should be borne in mind in this context. So making sure that there is an audit trail on the valuation process and its governance will be important. I think the message is clear that firms need to take a proper look at all their procedures surrounding this area. Market Integrity and Disruption The second area of focus is the question of liquidity management. In a sense, this is more predictable. The FCA’s message to firms – i.e., that they need to test all of their liquidity management and operational resilience in this area – comes as no surprise. The FCA makes reference to the Bank of England’s SWES report and IOSCO’s consultation paper on Liquidity Management for Collective Investment Schemes. I think the FCA’s messaging surrounding this is clear in this regard. My main comment on this is to flag the amount of work that firms are going to need to do to demonstrate an adequate audit trail in advance of FCA scrutiny. Consumer Outcomes The FCA allude to good outcomes for retail consumers. I think that for the institutional managers the point to watch here is how this impacts where you have created a “retail” side pocket or C class of shares. Whilst you might be targeting high net worth or mass affluent at various levels, the Consumer Duty will come into play. Issues such as differential fees between the pure institutional offering and the extended offering will need to be looked at in this context. Sustainable Finance The next substantive area is the fairly light touch treatment given to the FCA’s sustainability disclosure rules. The message here is less clear and I do not think that the letter really advances the discussion. I think that the point is that they are carrying on with their plans. This is significant given developments in the United States, but beyond this, there is little transparency on the proposed approach. Financial Crime and Market Abuse The last issue is financial crime and market abuse. There is nothing new here conceptually, but again, it is interesting that the FCA has cast a light on private funds’ due diligence on investors, broader know your customer (KYC), and on market abuse controls in relation to all managers. The main point here is that there is no sense that the private funds world is somehow subject to a light touch approach in this area. On the contrary, the FCA is interested in the thinking firms have given to appropriate KYC and anti-money laundering reviews for the various parties they interact with, for example, investors as well as investee companies. Wholesale Broker Contrast All of the above points are interesting, but it is worth asking: what has not been emphasised in this Dear CEO letter contrasted with the wholesale brokers letter. I would pick out a couple key points to note: The FCA has chosen not to major on remuneration issues regarding asset managers, particularly those relating to non-financial misconduct. I think this is interesting and the contrast in tone to the brokers letter is marked in this context. There is no assertion that there is a systemic cultural problem in the sector. Whilst the FCA is clearly interested in good governance, the cultural theme is dealt with in a very light touch way in the letter. When viewed in this context, the FCA does not appear to be raising the alarm about the sector as a whole. That said, the key messages that there is a lot of work to do and no sense that private fund management is somehow out of scope of the FCA’s regime are clear.

On 12 March 2025, the International Organisation of Securities Commissions (IOSCO) issued a consultation report on neo-brokers. Neo-brokers are a subset of brokers, characterized by providing online-only investment services and by the absence of physical operating branches, thereby using technology to facilitate those services and access to financial markets. Neo-brokers have very limited or no human interaction with retail investors who use their services. Their selling point is immediate and user-friendly, mostly with access via mobile apps and websites, often advertised as providing no or low-commission trading. The consultation report sets out IOSCO’s understanding of the business model developed by neo-brokers and the potential issues that may arise because of the activities of these neo-brokers. The report then sets out a list of potential recommendations provided as guidance. Next steps The deadline for comments on the consultation report is 12 May 2025.

On 12 March 2025, the International Organisation of Securities Commissions (IOSCO) issued a new consultation report on artificial intelligence (AI) in capital markets. The purpose of the consultation report is to create a shared understanding among IOSCO members of the issues, risks and challenges that emerging AI technologies used in financial products and services may pose to investor protection, market integrity, and financial stability, and to assist IOSCO members as they consider regulatory responses. The consultation report: Briefly outlines the evolution of the use of AI technologies in capital markets and details common use cases for AI by market participants. Details risks, challenges, and other issues associated with AI technologies. In particular, IOSCO focuses primarily on recent advancements in AI, and outlines what these developments may mean for investor protection, market integrity, and financial stability. Analyzes how certain market participants are approaching the development, deployment, and maintenance of AI systems, and how recent advancements in AI are impacting certain market participants’ considerations for policies, procedures, and controls around their use of AI. IOSCO also identifies certain risk management and governance principles that are emerging in the industry. Provides an overview of surveyed IOSCO members’ existing and proposed responses to the use of AI systems in the financial sector. Next steps The deadline for comments on the consultation report is 11 April 2025.

On 12 March 2025, the International Organisation of Securities Commissions (IOSCO) issued its work programme for 2025. The 2025 work programme includes that IOSCO will: Prioritize issues related to non-bank financial intermediation again in 2025. Continue its review of the IOSCO Principles for the Valuation of Collective Investment Schemes. Spearhead a series of targeted actions to tackle new risks to retail investors, including imitative and copy trading, poor digital engagement practices, potential conflicts of interest by neo-brokers and the activities of finfluencers. Conduct an assessment of the implementation of its recommendations on sustainability-related practices, policies, procedures and disclosures in asset management. Issue a final report on pre-hedging practices in H2 2025.

In this latest episode of our podcast series, Let’s talk asset management, Hannah Meakin, Lucy Dodson and Simon Lovegrove discuss the UK Financial Conduct Authority’s recent guidance on its expectations for authorised fund applications made by firms for collective investment schemes to be authorised as authorised unit trusts, authorised contractual schemes and authorised open-ended investment companies. Listen to the podcast here.

In our EMEA regulatory insights series colleagues from our EMEA offices provide an update on some of the key regulatory issues they are seeing in their local market. In this latest episode Floortje Nagelkerke and Nikolai de Koning from our Amsterdam office provide a regulatory update for the Netherlands. This includes the AFM’s strategy 2023-2026, DORA and MiCA implementation, sustainability compliance and anti-money laundering. Listen to the podcast here.

On 10 March 2025, the European Securities and Markets Authority published the official translations of the European Supervisory Authorities (ESA) guidelines on templates for explanations and opinions, and the standardised test for crypto-assets, under Article 97 (1) of the Regulation on markets in crypto assets (MiCA). The guidelines apply from 12 May 2025. Member State competent authorities must notify an ESA as to whether they comply or intend to comply with the guidelines, or otherwise with reasons for non-compliance. They must do this within two months of the translations being published. Financial market participants and financial institutions are not required to report whether they comply with the joint guidelines.

On 10 March 2025, the European Central Bank (ECB) issued a press release stating that it had positively concluded its exploratory work for offering a Verification of Payee (VoP) service for payment service providers (PSPs) building on the services developed by the Banco de Portugal and Latvijas Banka. The press release goes on to state that the two solutions offered by these Eurosystem central banks have been designed in accordance with the VoP scheme developed by the European Payments Council. The solutions will achieve SEPA-wide reach and will benefit from the coordination by the Eurosystem. Any PSP in the euro area will be able to fulfil its obligation to offer a VoP service to their customers by 9 October 2025, using one of the two solutions. Further information on the VoP solutions offered by the two Eurosystem central banks can be found on the websites of the Banco de Portugal and Latvijas Banka, or PSPs may contact the ECB via email.

On 11 March 2025, the Financial Conduct Authority (FCA) published a statement setting out its position on its sustainability regulations and UK defence. In the statement, the FCA emphasises that there is nothing in its rules, including those relating to sustainability, that prevents investment in or finance for defence companies. It explains that its sustainable finance rules, which apply to firms providing financial products and services as well as some listed companies, do not require financial institutions to treat defence companies differently because they are in the defence sector.  The FCA notes that its sustainability-related rules have two aims: to ensure information about investments claiming to be sustainable can be trusted and readily understood, and to improve the quality of sustainability-related information in the market. These rules should not be confused with financial institutions’ own policies relating to the type of businesses they wish to support and their own appetite for risk.  The statement also flags that it is up to individual lenders and investors whether they provide the capital defence companies need. The FCA reminds firms that some consumers will also want options to invest in line with their ethical values, so it is important they have the freedom to make choices about where they invest their money.  

On 11 March 2025, the Financial Conduct Authority (FCA) published a statement on its next steps in relation to the motor finance review. Background The FCA is currently reviewing the past use of motor finance discretionary commission arrangements (DCAs), with the aim of understanding if firms failed to comply with requirements relating to DCAs and if consumers lost out as a result. If they have, the FCA intends to ensure consumers are appropriately compensated in an orderly, consistent and efficient way. Potential consultation Since the review was launched, a ruling by the Court of Appeal has raised the possibility of widespread liability among motor finance firms wherever commissions were not properly disclosed to customers, and the FCA has been granted permission to intervene in the appeal. The FCA confirms that if, taking into account the Supreme Court’s decision, it concludes that motor finance customers have lost out due to widespread failings by firms, then it is likely to consult on an industry-wide redress scheme. Under a redress scheme, firms would be responsible for determining whether customers have lost out due to the firm’s failings and, if they have, offering appropriate compensation. The FCA would set rules firms must follow and put checks in place to ensure they do. The redress scheme is intended to be simpler for consumers than bringing a complaint, and the FCA expects it to result in fewer consumers relying on a claims management company (and therefore keeping all of any compensation they receive). The FCA also notes that it would be more orderly and efficient for firms than a complaint led approach, contributing to a well-functioning market in the future. Next steps The FCA no longer plans to make a further announcement in May, as previously intended. It will instead confirm within 6 weeks of the Supreme Court’s decision whether it is proposing a redress scheme and, if so, how it will take that forward. Its next steps on non-DCAs will also be informed by the outcome of the case. There may also be a separate consultation on changes to the FCA’s rules, depending on the Supreme Court’s decision. The FCA notes that, throughout its work, it will continue to consider how to make sure affected consumers are appropriately compensated and the motor finance market continues to work well, with effective competition.

In this latest episode of Global Regulation Tomorrow Plus Elisa de Wit, Vittorio Casamento and Simon Lovegrove explore the carbon market generally and then discuss the Australian financial services regime for carbon credits and when to apply for an AFS licence. Listen to the podcast here.

On 10 March 2025, the Financial Conduct Authority (FCA) published the findings from its multi-firm review of liquidity risk management at wholesale trading firms. Background The FCA notes that, over the past few years, it has engaged with firms that had experienced instantaneous and firm-specific liquidity shocks during stress events such as the COVID pandemic, the Russia/Ukraine war, the nickel price spike, energy price volatility and others. Those liquidity shocks included large cash outflows due to margin-calls, buy-ins of large open short settlement positions, and instances of poor management of client relationships. Recent Dear CEO letters to sell-side firms (including to wholesale brokers in January 2023 and January 2025, to principal trading firms in August 2023 and to wholesale banks in September 2023) have seen the FCA flag various issues and expectations relating to liquidity risk management. The FCA flags that sell-side wholesale firms subject to the IFPR should, by definition, not be globally systemic; however, many are key participants in certain specific markets like commodities, metals, and energy, whose structure differs from equities, fixed income or derivatives. It warns that a disorderly failure of one or more of these firms in these markets has the potential to amplify market wide shocks and could cause significant disruption, as they provide crucial clearing and settlement services to other market participants and could pose contagion risk if they fail.   Key findings In its findings, the FCA summarises its observations from the multi-firm review it carried out of liquidity risk management at a range of wholesale trading (sell-side) firms, particularly brokers, that are in scope of the Investment Firms Prudential Regime (IFPR). Key observations included: Many firms were applying approaches to liquidity management that were appropriate and proportionate to the nature, scale and complexity of their business model. However, some had weaker approaches that were not commensurate with their size, complexity and the instantaneous nature of their liquidity risks. Often these firms had not updated their assumptions in the light of the events of the last few years. Several firms had weaknesses in their approach to liquidity stress testing and contingency funding plans that lacked a range of contingency actions to allow them to mitigate even commonly identified liquidity stress scenarios in a timely manner. The FCA flagged that these findings reinforce the message from their Dear CEO letters regarding a lack of experience and under-estimation of the severity of events. All firms in the study identified intra-day (T0) and inter-day (T1) stressed cash outflows as their primary liquidity risk, with firms modelling, on average, 80% of their stressed liquidity outflows occurring on T0 or T1. The findings also set out the good and poor practices identified by the FCA in the following areas: governance and risk culture; stress preparedness; contingency funding plans and wind-down plans; and liquidity risk management capabilities. The FCA suggests that similar firms reference these good and poor practices to strengthen their approach to liquidity risk management. Actions Following the reviews, the FCA provided direct feedback to all in-scope firms, including identified weaknesses and areas for improvement. Where it identified potentially critical weaknesses, firms were provided with prompt initial feedback. The FCA plans to continue to use these and other regulatory tools where it finds firms are not properly managing their liquidity risks. Next steps The FCA explains that the publication setting out its findings is part of a broader communication process, and that it plans to organise roundtables with firms, industry trade bodies and consultants to share its observations and findings. It also intends to take questions and participate in practical discussions aimed at improving liquidity risk management in the sector and encourage adoption of good practices.

On 10 March 2025, the Financial Conduct Authority (FCA) published a feedback statement on vote reporting, produced by the Vote Reporting Group. Background The Vote Reporting Group was established in November 2022 to develop detailed proposals to enhance shareholder vote reporting by asset managers operating in the UK. The group is comprised of members from across the investment community, including investment managers, pension funds, insurers, companies, investment consultants, proxy advisers and non-governmental organisations, with the FCA acting as group Secretariat. In June 2023, the group published a consultation and discussion paper which proposed a voluntary, standardised and comprehensive vote reporting template for asset managers to communicate to asset owner clients on their voting activity. The paper also explored the case for the vote reporting template being a public registry Feedback statement The feedback sets out the summarises the feedback it received to the consultation paper, in relation to both the vote reporting template and the public registry. It also sets out the group’s response to that feedback. On the vote reporting template, the group confirms that the template will include: Standard fields. These will mostly remain as consulted on, with an added field to distinguish between the country of incorporation and the country of trade, and some changes to field names and categories to better align with market terminology. Vote category fields, which have been updated to offer more options for users (with the aim of improving the accuracy of the information). A narrative rationale field, which will remain ‘single tier’ and will allow users to select up to 5 categories. The template will be owned and managed by the Pensions and Lifetime Savings Association. Next steps The group confirms that there is no immediate action for firms to take regarding their vote reporting. All next steps firms can take are set out in the PLSA’s FAQ document, and the group and the PLSA plan to continue engaging with stakeholders during the year to deliver and embed the template. The template is expected to be operational and ready for firms to use from early 2026.

On 10 March 2025, the Financial Conduct Authority (FCA) published a letter on supporting artificial intelligence (AI), innovation and growth in financial services, which was written jointly by the FCA and the Information Commissioner’s Office (ICO) and addressed to Trade Association chairs and CEOs. Background In the letter, the FCA and ICO explain that they recognise the ongoing importance of providing the financial services sector with regulatory clarity and certainty around the use of AI and other technologies in ways that support responsible innovation and create benefits for the public. They highlight their collaborative work to help industry navigate the requirements of UK financial and data protection regulations, including through regular ICO participation in FCA TechSprints, joint statements on customer communications, and involvement in the Digital Regulation Cooperation Forum (DRCF)’s AI and Digital Hub pilot. Roundtable The FCA and ICO highlight a recent FCA and Bank of England survey, which identified data protection and the Consumer Duty as being in the top three regulatory constraints to AI deployment within financial services. They note their concern that these results seem to show a lack of confidence among some firms to develop and adopt AI technology, as well as potential uncertainty around the interactions between the regulatory regimes. In light of this, to help further develop their understanding of the challenges faced by firms and ensure they are continuing to provide effective advice and guidance, the FCA and ICO plan to host a roundtable with industry leaders in London on 9 May 2025. Topics for discussion at the roundtable will include: The broad areas of regulatory uncertainty and challenge that industry/firms face in respect of AI adoption and wider innovation. How the ICO and FCA can work together with industry to provide greater regulatory certainty and support growth. The specific areas of data protection and financial regulation in which greater regulatory support is needed in order to enhance the ability to innovate and adopt new technologies. Stakeholders interested in attending the roundtable are asked to contact the FCA by 21 March 2025.

On 4 March 2025, the Digital Markets, Competition and Consumers Act 2024 (Commencement No. 2) Regulations 2025 were published on legislation.gov.uk. These Regulations bring into force certain provisions of the Digital Markets, Competition and Consumers Act 2024 (Act) on 6 April 2025 and bring further provisions, relating to consumer savings, into force on 1 January 2026. These are the second commencement Regulations made under the Act.