Towards the end of 2025 we saw updates from a number of regulatory or pan-industry bodies. Across the Bank of England (BoE), Financial Markets Standards Board (FMSB), and Financial Stability Board (FSB), three recurring concerns dominate: systemic vulnerabilities, structural shifts in markets, and data transparency gaps.

• BoE Financial Stability Report emphasises elevated global risks – geopolitical tensions, stretched asset valuations (particularly in AI-driven sectors), and rising sovereign debt. Private markets and leveraged credit are flagged as resilience blind spots, prompting the next System-Wide Exploratory Scenario (SWES) to focus on these areas.

• FMSB’s 10-Year Review highlights long-term drivers reshaping markets: demographic shifts, geopolitical fragmentation, and technology-led disruption (AI, tokenisation). It notes a regulatory pivot toward simplification and disclosure rather than heavy intervention, alongside structural changes such as electronification, new asset classes, and regional market hubs.

• FSB Annual Report underscores the rapid growth of non-bank financial intermediation (NBFI), now over half of global financial assets. Vulnerabilities persist in liquidity transformation and leverage, compounded by poor visibility in private credit markets – an area regulators are prioritising for enhanced data collection.

• FCA’s latest Regulatory Initiatives Grid (Dec 2025) sets out a two-year pipeline of major reforms, including T+1 settlement (Oct 2027), securitisation and EMIR intragroup rule reviews, transaction reporting overhaul, client categorisation simplification, crypto asset legislation, and measures to strengthen wholesale market resilience and Consumer Duty compliance.

Together, these reports signal a regulatory focus on market resilience under stress, operational and technological risk management, and closing transparency gaps in private and non-bank finance. Supervisors are moving from rule-making to testing firms’ ability to manage interconnected risks in an environment of high leverage, rapid innovation, and geopolitical uncertainty.

This note offers a high-level look ahead to the financial regulatory agenda in 2026. After a 2025 dominated by finalising prudential packages, bedding-in new digital and operational resilience rules, and accelerating sustainability and data initiatives, the coming year looks less like a ‘big bang’ and more like a real-world test of firms’ ability to absorb multiple reforms at once.

• Basel 3.1 and global capital reform: EU begins partial Basel 3.1 implementation in 2026; UK has delayed its go-live to July 2027; the US continues to debate scope, calibration and timing of its Basel Endgame proposals, leaving firms planning against a shifting baseline. In Dec 2025 the Financial Policy Committee announced it would review implementation of the leverage ratio in UK, prioritising a review of the approach to regulatory buffers. Click here to register to register and view our Bank Capital Compendium and 2026 Outlook.

• Market structure and the road to T+1: 2026 becomes the core build-and-test year for UK/EU firms ahead of the October 2027 move to a one-day settlement cycle, requiring major changes to cut off times, trade matching and funding workflows. 2026 will also be the year where firms focus on finalising build out for US treasuries clearing, ahead of deadline for eligible cash transactions on 31 Dec 2026, and repo transactions on 30 Jun 2027.

• Digital assets, tokenisation and stablecoins: With Markets in Crypto-Assets Regulation (MiCA) fully active and stablecoins the regulatory focal point, the Bank of England’s consultation progresses toward implementation, while US initiatives such as the GENIUS Act signal momentum toward federal stablecoin rules. Tokenisation pilots continue to scale – for example in December the Commodity Futures Trading Commission (CFTC) launched a pilot programme a pilot programme allowing tokenised digital assets like Bitcoin, Ether, and USDC to be used as collateral in derivatives markets, issued guidance on tokenised collateral, and withdrew outdated rules given enactment of the GENIUS Act. 

• Private markets, leverage and ‘retailisation’: The rotation into private credit continues alongside rising concerns about leverage, valuation opacity and increased retail access via Long-Term Asset Funds (LTAFs) and semi-liquid structures, triggering closer regulatory attention. On 9 Jan the Financial Services Regulation Committee published its report ‘Private markets: Unknown unknowns’.

• Pre-hedging and market conduct expectations: Pre-hedging practices face renewed scrutiny following Financial Markets Standards Board publications and the International Organization of Securities Commissions’ work to clarify acceptable dealer behaviours around order anticipation, information usage and execution fairness. All eyes now on the National Competent Authorities (NCAs) and whether different jurisdictional NCAs take inconsistent approaches.

• Digital operational resilience and cyber: Supervisors intensify their scrutiny under the Digital Operational Resilience Act, focusing on technology risk management, incident reporting, cloud reliance and third-party oversight as firms refine mapping, testing programmes and resilience playbooks.

• AI, data and model governance: The EU AI Act’s obligations crystallise during 2026, prompting firms to formalise inventories, governance models, testing frameworks and controls as AI becomes embedded in risk, trading and customer engagement.

• Sustainable finance and climate disclosure: More firms fall into scope of the Corporate Sustainability Reporting Directive, transition plan expectations advance in the UK and EU, and international baselines tighten – driving more complex data requirements and heightened greenwashing scrutiny.

• 24/7 trading: The rise of round-the-clock trading, driven by tokenisation, fractionalisation and faster settlement, is dismantling the traditional regional market rhythm and enabling continuous price discovery (though the jury is still out on whether this is entirely positive, or whether markets need these natural ‘brakes’). This structural change expands access for institutional and retail investors, but as FMSB notes in its recent report, regulators must stay engaged to ensure post-trade standards keep pace.

• MiFID Transparency & Consolidated Tape: New EU and UK rules from late 2025 will significantly reshape bond transparency and post-trade reporting, alongside progress toward consolidated tapes (initially for bonds, later other asset classes), improving market data quality and liquidity. Regulators have appointed providers for the bond consolidated tape: the Financial Conduct Authority (FCA) selected Etrading Software in the UK, and European Securities and Markets Authority (ESMA) chose Ediphy (fairCT) in the EU, with bond tapes expected to become operational from mid-2025. See detailed timelines here.

• Retail markets, value for money and conduct: Consumer Duty supervision is intensifying, with FCA thematic work on fees, product design, digital engagement and vulnerable customers driving changes to governance and distribution. The FCA has signalled it will reduce disproportionate impacts on wholesale firms and clarify how the duty should be applied. Planned actions include refining supervisory expectations, adjusting client categorisation, and narrowing aspects of the duty’s scope.

• Regulatory divergence and cross-border friction: US, UK and EU approaches diverge further on prudential, ESG and digital regulation fronts, increasing the complexity of capital planning, disclosures and technology deployment across multinational groups. Recent indications are that the UK government will not seek closer alignment with EU on financial services. 

• Ring-fencing review: His Majesty’s Treasury (HMT) is conducting a review of the UK ring-fencing regime following the Leeds Reforms, focusing on permissions, governance, prudential inefficiencies, intra-group resource sharing, and growth priorities, with consultation on draft rules expected mid-2026; PRA shows some flexibility, but major changes likely require primary legislation. 

• Margin changes: Updates to UK margin rules align more closely with the US, creating a level playing field and reducing operational burden for firms that fall out of scope. A Prudential Regulation Authority/FCA consultation proposes further alignment on regulatory initial margin treatment, with potential changes to scope, thresholds and legacy trades, pending final outcome.

• UK T-bill consultation: The government is consulting on changes to T-bill issuance to deepen market liquidity and broaden participation, including attracting greater retail investor involvement, potentially expanding the role of T-bills in government financing, with decisions expected in 2026–27. 

• When all is Fed and done: for a broader economic strategy review, please see the Year Ahead 2026 from our Desk Strategy team, which explores how expected US rate cuts, expanding fiscal stimulus and shifting trade and geopolitical dynamics could support near-term growth but raise material inflation, market and policy risks across the US, Europe and the UK. 

2026 is shaping up as a year defined by implementation rather than invention, as the FMSB paper on Future of Financial Markets outlined, technology, new entrants and loosening of the regulatory reins is driving market structural change at a pace not seen since 2008 reforms.

As multiple reforms converge – from settlement cycles and AI governance to private market scrutiny and stablecoin frameworks – supervisors move firmly into a ‘show me’ phase. Firms that streamline processes, strengthen governance and invest early in operational resilience will be better positioned for the regulatory demands that define the second half of the decade.

As ever, please get in touch through your usual bank contacts to discuss any of the above.