On 21 November 2024, the Bank of England (BoE) and Financial Conduct Authority (FCA) published a report setting out the results of their third survey of artificial intelligence (AI) and machine learning in UK financial services. Background In the report, the BoE and FCA highlight the increasing use of AI in UK financial services over the past few years and the fact that, while it has many benefits, AI can also present challenges to the safety and soundness of firms, the fair treatment of consumers, and the stability of the financial system. In light of these challenges, the regulators note the need for them to maintain an understanding of the capabilities, development, deployment and use of AI in UK financial services. The survey was carried out to build on existing work to further the BoE’s and FCA’s understanding of AI in financial services, continuing the previous two surveys (in 2019 and 2022) by providing ongoing insight and analysis into AI use by BoE and/or FCA-regulated firms. The 2024 survey also incorporated questions relating to generative AI, given its growth since the 2022 survey. Findings In the report, the BoE and FCA set out their findings on a number of key topics, including: Use and adoption of AI: The report flags that 75% of firms are already using AI, with a further 10% planning to use AI over the next three years. Foundation models were found to form 17% of all AI use cases, supporting anecdotal evidence for the rapid adoption of this complex type of machine learning. Third-party exposure: The survey found that a third of all use cases are third-party implementations, supporting the view that third-party exposure will continue to increase as the complexity of models increases and outsourcing costs decrease. Automated decision-making: 55% of all AI use cases were found to have some degree of automated decision-making, with 24% of those being semi-autonomous (i.e. although they can make a range of decisions on their own, they are designed to involve human oversight for critical or ambiguous decisions). Only 2% of use cases have fully autonomous decision-making, according to the report. Materiality: Of all AI use cases, 62% are rated low materiality by the firms that use them, while 16% are rated high materiality. Benefits and risks of AI: The report notes that the highest perceived current benefits are in data and analytical insights, anti-money laundering (AML) and combating fraud, and cybersecurity. In terms of risks, 4 of the top 5 perceived current risks are related to data, and the risks expected to increase the most over the next three years are third-party dependencies, model complexity, and embedded or ‘hidden’ models. Cybersecurity is rated as the highest perceived systemic risk both currently and in three years, with critical third-party dependencies causing the largest increase in systemic risk. Constraints: Data protection and privacy is the largest perceived regulatory constraint to the use of AI, followed by resilience, cybersecurity and third-party rules, and the FCA’s Consumer Duty. Safety, security and robustness of AI pose the largest perceived non-regulatory constraint. Governance and accountability: The survey found that 84% of firms reported having an accountable person for their AI framework, with 72% of firms saying that their executive leadership were accountable for AI use cases.

On 20 November 2024, the Basel Committee on Banking Supervision issued a press release which stated that it members unanimously reaffirmed their expectation of implementing all aspects of the Basel III framework in full, consistently and as soon as possible. The press release added that the Basel Committee would be issuing its guidelines for counterparty credit risk management next month and an update on its work concerning the 2023 banking turmoil will be published in early 2025.

On 21 November 2024, the International Organization of Securities Commissions (IOSCO) issued a consultation report on pre-hedging. Definition For the purposes of the consultation report, IOSCO proposes to define pre-hedging as “trading undertaken by a dealer, in compliance with applicable laws and rules, including those governing frontrunning, trading on material non-public information/insider dealing, and/or manipulative trading where: the dealer is dealing on its own account in a principal capacity; the trades are executed after the receipt of information about an anticipated client transaction and before the client (or an intermediary on the client’s behalf) has agreed on the terms of the transaction and/or irrevocably accepted an executable quote; and the trades are executed to manage the risk related to the anticipated client transaction.” Consultation report The consultation report assesses potential conduct and market integrity issues associated with the practice of pre-hedging. It considers IOSCO members’ existing regulatory approaches to pre-hedging and other international standards and identifies any potential issues and gaps in market standards. It also sets out proposed recommendations as guidance for regulators to consider in relation to when pre-hedging may be appropriate and the effective management of conduct risk arising from pre-hedging. Next steps The deadline for comments on the consultation report is 21 February 2025. Following feedback to the consultation report, IOSCO will publish a final set of recommendations. IOSCO members should consider how they wish to apply these recommendations to dealers in their jurisdictions, taking into account their relevant legal and regulatory framework.

On 21 November 2024, the Financial Conduct Authority (FCA) launched a consultation, CP24/22, on its proposal to make further temporary changes to how firms handle motor finance complaints where they involve a commission arrangement. Background In January 2024, the FCA introduced new rules for handling motor finance complaints where there was a discretionary commission arrangement (DCA) between the lender and the broker of the loan. Under the new rules, motor finance firms were given more time to respond to these complaints. In a recent judgment on motor finance commission, the Court of Appeal decided it was against the law for the dealers involved to receive a commission from lenders providing motor finance without first telling the customer details about the commission and getting their informed consent to the payment. The FCA warns that the judgment could affect complaints relating to all motor finance agreements where commission arrangements are in place, and that it anticipates an increase in complaints about commission arrangements following the judgment. The FCA’s proposals In response to this, the FCA is consulting on similar complaint handling rules for complaints relating to motor finance agreements where there was a commission arrangement other than a DCA. The proposed extension is intended to allow firms more time to handle complaints efficiently and effectively and help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms. The FCA is consulting on two potential options for extending the time firms have to provide final responses to motor finance complaints involving a non-DCA: Extending until 31 May 2025, to reflect how long it may take to hear whether an appeal will be granted following the Court of Appeal decision. The FCA plans to set out its next steps on DCA complaints in May 2025, and subject to the outcome of any appeal application it would update the motor finance non-DCA commission complaints at the same time. A longer extension until 4 December 2025, to align with the current rules for motor finance firms dealing with discretionary commission complaints. Next steps The deadline for responses to CP24/22 is 5 December 2024. Subject to considering consultation responses, the FCA is aiming to publish its policy statement on 19 December 2024, although it notes that this date may change.

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On 20 November 2024, the European Supervisory Authorities (ESAs) published a final report on joint guidelines on the system established by the ESAs for the exchange of information relevant to the assessment of the fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions and financial market participants by competent authorities. Per Article 31a of the Regulations establishing the ESAs, the ESAs have developed a system to facilitate the timely exchange of information relevant to the assessment of the fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions and financial market participants between competent authorities. This system includes the ESAs Information System, and the guidelines now published. The guidelines clarify how the ESAs Information System should be used and how data should be exchanged. The ESAs have also developed operating rules for the ESAs Information System which do not form part of the guidelines. The operating rules will be communicated to competent authorities.

On 20 November 2024, the Financial Stability Board (FSB) issued a report ‘Legal and regulatory challenges to the use of compensation tools’. The report identifies potential ways to address challenges in the use of compensation tools and follows guidance that the FSB published in 2018 on the use of compensation tools to address misconduct. Since March 2021, several jurisdictions have implemented legal and regulatory changes related to the use of compensation tools. The lessons from the 2023 banking failures reinforced the lessons from the global financial crisis: compensation must be aligned with prudent risk-taking. The report notes that consistent with previous FSB compensation progress reports, there is complexity and variability in implementing different compensation tools. In-year adjustments are relatively straightforward to implement, whereas malus and clawback provisions present varying degrees of challenges. Clawback provisions are difficult to enforce and often involve prolonged legal battles, especially in the United States and Europe, where cultural or legal hurdles complicate their application. In some jurisdictions restrictive labour laws prevent clawback being applied. The report highlights a number of practical solutions to addressing challenges experienced by jurisdictions and firms applying compensation tools. These centre around four key themes: the role played by the board, the importance of culture, the importance of transparency and the role of financial authorities. In relation to the board, the report notes that the board, including the remuneration committee, play a crucial role in establishing compensation frameworks that drive the desired risk culture. Boards must also be willing to discharge their responsibilities to apply compensation tools where risk incidents occur, based on appropriate risk reporting from sources such as the Chief Risk Officer and Risk Committee. Many of the challenges in the use of compensation tools can be overcome through uplifting and enhancing compensation practices (for example, clear risk triggers for each tool).

On 20 November 2024, the European Securities and Markets Authority (ESMA) issued a consultation on the conditions of the Active Account Requirement (AAR) following the review of the European Market Infrastructure Regulation (EMIR 3). Background EMIR 3 addresses financial stability risks caused by EU clearing members and clients being exposed to systemically important third-country central counterparties (CCPs) (Tier 2 CCPs) by requiring some financial counterparties (FCs) and non-financial counterparties (NFCs) with exposures to clearing services of substantial systemic importance to hold an operational and representative active account at EU CCPs. More specifically, Article 7a of EMIR (as revised by EMIR 3) requires certain FCs and NFCs to hold, for certain categories of derivative contracts, at least one active account at an EU CCP and for some of those FCs and NFCs to clear at least a representative number of trades in this account. The derivative contracts subject to the active account requirement are over-the-counter (OTC) interest rate derivatives denominated in euro, OTC interest rate derivatives denominated in Polish zloty and Short-Term Interest Rate Derivatives (STIR) denominated in euro, as outlined in Article 7a(6) of EMIR and further clarified in Recital 11 of EMIR 3. Consultation ESMA is mandated to further specify the conditions of the AAR in a Regulatory Technical Standard (RTS) within six months following the entry into force of EMIR 3. The Consultation Paper seeks feedback from stakeholders on several key aspects of the AAR. It outlines the requirements proposed by ESMA to meet the operational conditions set out under points (a) to (c) of Article 7a(3), and their stress-testing. It also specifies the details of the representativeness obligation under condition (d) of Article 7a(3), including the relevant classes of derivatives, the different trade size and maturity ranges, the number of most relevant subcategories per class of derivatives, as well as the duration of reference periods. It also details the reporting requirements for counterparties subject to the AAR under Article 7b. Next steps ESMA has published the Consultation Paper shortly ahead of the publication of EMIR 3 in the EU Official Journal to balance the short deadline for ESMA to submit the draft RTS to the Commission. ESMA will organise a public hearing on 20 January 2025. The deadline for comments on the consultation is 27 January 2025. ESMA will consider the feedback it receives to this consultation in Q1 2025. ESMA aims to submit the final draft RTS to the Commission within 6 months following the entry into force of EMIR 3. 

On 19 November 2024, the Special Public Bill Committee on the Property (Digital Assets etc) Bill, established by the House of Lords, issued a call for written evidence on the Bill. The Bill The Bill provides that something may be capable of attracting property rights even if does not fit into either of the two categories of personal property that have traditionally been recognised under the law of England and Wales (i.e. things in possession and things in action). It had its first reading in the House of Lords on 11 September 2024. The call for evidence Special Public Bill Committees are empowered to take written and oral evidence on a Bill before considering it. In this call for evidence, the Committee is asking for written evidence in response to questions on: Views on the Bill (in fewer than 300 words). Whether the Bill, in its current form, is necessary and effective. Any negative or unexpected consequences the Bill would have. How the Bill could be improved and whether it should be amended to achieve this. Whether the Bill should have retroactive effect. What implications the Bill could have for the development of this area of common law (in this and other jurisdictions). Next steps The deadline for submitting evidence to the Committee is 20 December 2024.  

On 19 November 2024, HM Treasury (HMT) published an updated version of its guidance, Money Laundering Advisory Notice: High Risk Third Countries. The guidance contains advice issued by HMT about risks posed by jurisdictions with unsatisfactory money laundering and terrorist financing controls. In the November update, the guidance has been amended to reflect changes to the countries in scope of High Risk Third Countries, as defined in the Money Laundering Regulations, following updates to the lists of the Financial Action Task Force at its plenary meeting in October 2024.

On 19 November 2024, the European Securities and Markets Authority (ESMA) published a final report containing technical advice on the Central Securities Depositories Regulation (CSDR) penalty mechanism. Background The CSDR contains measures intended to prevent and address failures in the settlement of securities transactions (settlement fails), commonly referred to as settlement discipline measures. They consist of reporting requirements, cash penalties for central securities depositories (CSD) participants in case of settlement fails and mandatory buy-ins where a CSD participant fails to deliver the securities within a fixed extension period. The European Commission (Commission) is empowered to adopt delegated acts to specify the parameters for the calculation of a deterrent and proportionate level of cash penalties. In December 2023 ESMA issued a consultation paper seeking views on the effectiveness of the current penalty mechanism in discouraging settlement fails and set out preliminary views on three topics: Alternative parameters, when the official interest rate for overnight credit charged by the central bank issuing the settlement currency is not available. The treatment of historical reference data for the calculation of late matching fail penalties. Alternative methods for calculating cash penalties, including progressive penalty rates. The consultation closed in February 2024. Final report The final report now published contains three main sections on the topics mentioned above. It also summarises the feedback received to the earlier consultation together with ESMA’s technical advice to the Commission. ESMA’s technical advice includes: Recommending that in the absence of an overnight interest credit rate due to the monetary policy of the central bank issuing the settlement currency, other comparable interest rates of the European Central Bank (ECB) and the relevant central bank could be used to calculate a proxy which a CSD can use to calculate the cash penalties due to lack of cash. Recommending that the Commission amend the relevant CSDR Level 2 provisions to allow CSDs to use the oldest available reference price for the calculation of the related cash penalties, where settlement instructions have been matched after the intended settlement date, and that intended settlement date is beyond 40 business days in the past from the matching date. Recommending that the design of the current penalty mechanism be maintained, i.e. not to introduce fundamental changes to the methods for calculating penalties. Discarding at this stage the introduction of progressive penalty rates (with or without convexity), as well as changes to the parameters defining the rate levels (e.g. introducing an explicit link between the penalty rates and interest rates for settlement fails due to lack of financial instruments). These policy options may be further explored in a future review of the penalty mechanism. Proposing certain changes to penalty rates: maintain the current penalty rates for settlement fails due to lack of liquid shares, and due to lack of instruments traded on an SME growth market; increase penalty rates by 50% for settlement fails due to lack of illiquid shares, bonds other than sovereign bonds and all other financial instruments including ETFs; and by 100% for settlement fails due to lack of sovereign bonds; and increase the floor from 0 to 1 for the penalty rate for settlement fails due to lack of cash. Next steps The Commission will consider ESMA’s technical advice when amending Commission Delegated Regulation (EU) 2017/389. The powers of the Commission to adopt delegated acts are subject to Article 67 of the CSDR that allows the European Parliament and the Council to object to a delegated act within a period of 3 months, extendible by 3 further months at the initiative of the European Parliament or of the Council. The delegated act will only enter into force if neither the European Parliament nor the Council have objected on expiry of that period or if both institutions have informed the Commission of their intention not to raise objections.

On 19 November 2024, the Council of the EU issued a press release stating that it had adopted the Regulation amending the European Market Infrastructure Regulation and the related Directive amending various directives on the treatment of concentration risk towards central counterparties and the counterparty risk on centrally cleared derivative transactions. Next steps The draft Regulation and Directive will be published in the Official Journal of the EU before entering into force 20 days later.

On 19 November 2024, the Council of the EU issued a press release stating that it had adopted the Regulation on ESG rating activities. Next steps The Regulation will be published in the Official Journal of the EU and enter into force 20 days later. The Regulation will start applying 18 months after its entry into force.

In this latest episode of our podcast series, Let’s talk asset management, Hannah Meakin, Lucy Dodson, Rebecca Dulieu and Simon Lovegrove discuss the UK Financial Conduct Authority’s recent work on non-financial misconduct and its impact on the UK asset management sector. Listen to the podcast here.

On 19 November 2024, the Financial Conduct Authority (FCA) published a research note in which it reviews the methodology for calculating its market cleanliness statistic (MCS), which is used in its annual report to measure insider trading. The MCS is based on abnormal stock price movements before takeover offer announcements. The FCA plans to amend its methodology to improve the coverage and robustness of the MCS. It explains that the new methodology will incorporate intraday trading activity and lead to a statistic that is robust to periods of heightened market volatility. Its aim in making these adjustments is to ensure that the MCS supports the FCA in setting high standards of transparency, reducing the risk of market manipulation and promoting healthy competition. The MCS will be published according to the new methodology with effect from 2024. The FCA notes that it welcomes feedback on the revised methodology and findings set out in the research note.

On 19 November 2024, the Bank of England (BoE) published a consultation paper (CP) setting out proposals to introduce a set of Fundamental Rules for financial market infrastructures (FMIs), which it says are essential to the smooth and safe operation of the UK financial system and broader economy. Alongside the CP, the BoE also published a document setting out its approach to FMI supervision. The CP The CP is the BoE’s first use of its new power to make legally binding rules for UK central counterparties (CCPs) and central securities depositories (CSDs). The proposed rules will also apply to BoE-regulated UK payments systems and specified service providers. The aim of the proposed rules is to increase the transparency and effectiveness of the BoE’s role in supervising FMIs, by clearly setting out the outcomes that the BoE expects from FMIs (including their financial and operational resilience) and the actions they should take to understand and manage the risks they may pose to the broader system. The intention is that this will support FMIs’ compliance with the relevant regulatory regime and their supervisory engagement with the BoE, and consequently UK financial stability. The proposed Fundamental Rules are intended to be complementary to the existing relevant regulatory frameworks for FMIs. The form of the Fundamental Rules will differ depending on the type of firm; for example: For CCPs and CSDs, they will be rules made under Financial Services and Markets Act 2000 (FSMA 2000). For recognised payment service operators and specified service providers, they will take the form of a binding Code of Practice (CoP), pursuant to the powers given to the BoE under Part 5 of Banking Act 2009. The BoE also intends to apply the Fundamental Rules to systemic stablecoins, alongside the existing payments CoPs, in due course – it notes that it is continuing to develop its approach to a systemic stablecoin regime following its November 2023 discussion paper. The deadline for responses to the CP is 19 February 2025. The BoE plans to engage with stakeholders during the consultation period to gather a range of views on its proposals. The supervisory approach document The supervisory approach document sets out how the BoE will fulfil its role of supervising FMIs in practice. By providing this additional clarity, the BoE aims to help effective supervision by ensuring FMIs have a clear understanding of what it is seeking to achieve. The BoE notes that the supervisory approach will continue to evolve and that it will periodically update its approach to reflect its priorities and any new developments. The BoE intends to engage with stakeholders in relation to the supervisory approach document in Q1 2025.

On 19 November 2024, the International Organization of Securities Commissions (IOSCO) issued a new roadmap to enhance retail investor online safety. The first wave of the roadmap comprises of three consultation reports: Consultation report on Finfluencers. The consultation report explores the evolving landscape of finfluencers, the associated potential benefits and risks, and the current regulatory responses across jurisdictions. It highlights that many finfluencers are not familiar with traditional financial regulatory frameworks and may operate outside them, posing challenges for enforcement and oversight. It also identifies potential gaps in regulatory coverage, particularly for unregistered individuals who influence retail investors without the professional qualifications or oversight required of registered investment advice professionals. Finally, it proposes a comprehensive set of good practices for regulators, market intermediaries, and finfluencers themselves. These proposed good practices aim to foster a more transparent and accountable environment in which finfluencers operate in alignment with securities regulations and investor protection standards. Consultation report on Digital Engagement Practices. The consultation report considers existing IOSCO work, members’ regulatory approaches to digital engagement practices (DEPs); and other international standards and guidance to identify potential issues and gaps, with a caveat that there is currently no global standard on how regulators and other stakeholders should consider addressing any challenges that may stem from the increased use of DEPs by market intermediaries. Consultation report on Online Imitative Trading Practices: Copy Trading, Mirror Trading, Social Trading. The consultation report focuses on copy trading which is the most popular imitative trading strategy. Copy trading is an imitative trading practice that may be described as the strategy that allows a trader (the copy trader) to copy trades executed by one or more other trader(s), who are usually characterised as “experienced” or “professional”. Trade execution is frequently automated to a certain extent, with trades opened and closed without manual intervention and without the copy trader necessarily being aware of each trade that is placed, though other models are possible. The consultation report aims to assist IOSCO member regulators to assess the adequacy of the regulatory requirements in their respective jurisdictions that apply to copy trading and to consider where amendments may be useful. In doing so, the consultation report proposes a set of Good Practices that regulators could consider, in accordance with their respective mandates and applicable laws and regulations to help mitigate risks that may arise from this type of activity. Next steps The deadline for comments on each consultation report is 20 January 2025. 

On 19 November 2024, the European Supervisory Authorities (ESAs) together with the European Central Bank (ECB) issued the results of the one-off ‘Fit-for-55’ climate scenarios analysis. Fit-for-55 The ‘Fit-for-55’ package is a set of legislative proposals and policy initiatives designed as part of the European Green Deal with the aim of ensuring that EU policies are aligned with the climate goals agreed by the European Council and the European Parliament. More precisely, ‘Fit-for-55’ refers to the EU’s target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to the 1990 levels. The EU commitment is to transition to a climate-neutral economy by 2050. Climate risk analysis The objective of the ‘Fit-for-55’ climate risk analysis was to assess the resilience of the EU financial sector to climate and macro financial shocks, while the ‘Fit-for-55’ package is being smoothly implemented in the EU. The exercise was based on three scenarios that were developed by the European Systemic Risk Board (ESRB). It is part of the ESAs and ECBs’ joint effort to develop more advanced methodologies to better capture climate risks, in light of the urgency of the challenges posed by climate change. Additionally, it allows to gain insights into the financial sector’s capacity to support the green transition even under conditions of stress. The three scenarios were: The baseline scenario, the ‘Fit-for-55’ package is implemented in an economic environment that reflects the ESRB’s June 2023 forecasts, while still facing additional cost related to the green transition. The first adverse scenario, transition risks materialise in the form of ‘Run-on-Brown’ shocks, whereby investors shed assets of carbon-intensive firms. This hampers the green transition, since ‘brown’ firms do not have the financing they need to green their activities. The second adverse scenario, the ‘Run-on-Brown’ shocks are amplified with other standard macro-financial stress factors. Findings The results of the exercise show that estimated losses stemming from a ‘Run-on-Brown’ scenario have a limited impact on the EU financial system. The banking sector records first-round credit and market losses amounting to 5.8% of total exposures in scope, equivalent to EUR 343 billion, under the baseline scenario. In the first adverse scenario, the run on brown results in total losses of 6.7% relative to total exposures in scope, bringing total losses to EUR 393 billion. The second adverse scenario leads to total losses of 10.9% relative to total exposures in scope, totalling EUR 638 billion. EU investment funds undergo a fall in value of 4.0% of initial total exposure in the baseline scenario, or around EUR 396 billion, driven largely by declines in the values of equities held by the funds. In the second adverse scenario, the additional effect of a sharp, exogenous deterioration in the macroeconomic environment drives an overall immediate decline of 15.8% (EUR 1 563 billion). EU funds experience similar overall declines in asset values to the rest of the global investment fund sector in all scenarios.

On 12 November 2024, the Dutch Authority for the Financial Markets (Autoriteit Financiele Markten, AFM) published its Consumer Monitor Investors report (Consumentenmonitor Beleggers). The key message in the report is that not all asset managers and investment advisors comply with the obligation to ask investors about their sustainability preferences. Only 25% of investors investing with advice or through asset management are asked about these preferences, while 40% of these investors confirm that they consider sustainability to be important in their investment choices. Sustainability preferences increasingly important for investors The findings show that a third of investors make sustainable investments and that such investors mainly consider the name of the investment product to determine whether it fits their sustainability goals. For many of these investors, the desire to contribute to positive change in the world plays an important role. However, despite the fact that many investors are willing to include sustainability in their investment decisions, it appears that the industry still lags behind in actively soliciting these preferences. AFM emphasises that investment advisors and asset managers are obliged to ask investors about their sustainability preferences. Information provision and sustainability The report shows that independent investors mainly use (historical) price data and websites for their investment decisions. Only 5% of independent investors consult (f)influencers, a significant drop compared to 2022. It also appears that many investors still struggle to understand whether their investments meet their sustainability criteria. Over 40% of investors who consider sustainability important find it difficult to find information on the sustainability of their investments. For more information and the complete Consumer Monitor Investors, please see the press release.

On 18 November 2024, the European Securities and Markets Authority (ESMA) issued a final report recommending that the migration to T+1 occurs simultaneously across all relevant instruments and that it is achieved in Q4 2027. ESMA believes that 11 October 2027 would be the optimal date for the transition and that a coordinated approach with other jurisdictions in Europe should be adopted. ESMA has found that quantifying some of the costs and benefits relating to shortening the EU settlement cycle has been challenging. However, the elements assessed by ESMA suggest that the impact of T+1 in terms of risk reduction, margin savings and the reduction of costs linked to the misalignment with other major jurisdictions globally, represent important benefits for the EU capital markets. Furthermore, ESMA states that Article 5(2) of the Central Securities Depositories Regulation and the settlement discipline delegated regulation (Commission Delegated Regulation (EU) 2018/1229) will need to be amended to have legal certainty and foster the necessary improvements in post-trading processes needed to have a successful EU move to T+1. Next steps Following the publication of the final report, ESMA will continue its regulatory work related to the revision of rules on settlement efficiency, and addressing the T+1 governance together with the European Commission and the European Central Bank.