FCA wholesale markets regulatory priorities

27 March 2026

Adam Berry

The FCA has replaced more than 40 portfolio letters with a new suite of Regulatory Priorities reports, published annually by sector. The wholesale markets edition arrives at a pivotal moment.

The UK sits at the apex of global finance - the largest global market for the issuance of international bonds (12.1% share), foreign exchange trading (37.8%), and OTC interest rate derivatives trading (49.5%) – yet wholesale market participants face a regulator undergoing its own transformation. Gone is the portfolio letter model of incremental, firm-by-firm nudges.

In its place stands a document that speaks directly to Boards and Chief Executives, carries the explicit backing of the FCA's Interim Executive Director of Markets, and arrives with an unmistakable message: firms must have effective systems and controls to identify, assess and mitigate risk; where the FCA identifies serious failings, it will consider all available tools, including enforcement investigations.

This is not background reading. Boards and Chief Executives are expected to read these reports carefully, review the priorities within them, and act where they need to. This briefing sets out the FCA's five headline priorities, identifies what is genuinely new in the regulator's thinking, and offers practical steps your firm should take now.

This report is addressed to benchmark administrators, corporate finance firms, credit rating agencies, data reporting service providers, principal trading firms, trade repositories, trading venues, wholesale banks, and wholesale brokers.

Priority 1: Improve the resilience of firms and markets

Given the elevated risk environment, the FCA expects firms to raise standards of operational resilience, ensure trading controls are robust, and bolster liquidity management. Firms in this market reported 170 operational incidents in 2025, with third-party failures being the root cause of 26% of them – a statistic that underlines how quickly external dependencies can become internal crises.

What is new?

Previous FCA portfolio letters treated operational resilience largely as a compliance exercise – impact tolerances to be set, self-assessments to be filed, and tick-boxes to be satisfied. The register has shifted. The FCA is expanding dedicated supervisory contacts, applying a more risk-based approach for its largest firms, and making data collection more targeted and efficient.

More concretely, alongside the PRA, the FCA will introduce new rules for reporting operational incidents and information on material third parties following CP24/28, and will engage with firms during the implementation period.

The FCA is also signalling that it will consult in 2026 on rules and guidance to strengthen the resilience of markets during an outage, as part of its broader consultation on equity market structure and transparency – a market-wide contingency framework that goes beyond anything previously proposed.

On financial resilience, the FCA will consult on market risk capital requirements for investment firms in Q4 2026, with the explicit aim of making those requirements more proportionate to investment firms' distinct business models.

Practical steps for firms

Ensure important business services are recoverable within impact tolerances, develop scenario testing for severe disruptions, maintain robust incident response and recovery plans, and embed resilience into new product design and change management.
Assess and manage dependencies on third-party providers, ensuring robust due diligence and ongoing monitoring of resilience capabilities.
Implement robust liquidity frameworks to withstand stress events and reduce the risk of disorderly markets.
Prepare for the FCA to assess cyber and operational resilience using CQUEST and ORQUEST tools, focusing on firms with the highest inherent risk.
Wholesale brokers should review and stress-test contingency funding, recovery, and wind-down plans now, ahead of the FCA's planned sample review.

Priority 2: Enhance efficient, competitive and innovative markets

The FCA is pursuing a wide range of reforms to support economic growth and strengthen market integrity, while maintaining openness and competitiveness. Where possible, the FCA is giving wholesale market participants more flexibility to take risk-based decisions in markets with healthy competition, clear and trusted rules, and good quality information – streamlining rules to ensure markets work efficiently and imposing fewer prescriptive or pre-emptive checks.

What is new?

The scale and ambition of the FCA's reform programme mark a decisive departure from the portfolio letter era. The FCA has simplified listing rules and prospectus requirements, is introducing consolidated tapes for bonds and equities to improve price transparency and liquidity, has strengthened the commodity derivatives market, and has approved the first firms to run PISCES in a sandbox test. These are not aspirational commitments – they are live programmes with firm delivery dates.

Final rules on an equity consolidated tape are expected by the end of H1 2026, with a concurrent procurement process to appoint an operator running in parallel. The bond consolidated tape is due to launch in June 2026. Equally significant is the FCA's explicit signal that it will work with HM Treasury and the PRA to review the Senior Managers and Certification Regime with the aim of halving its regulatory burden – a review to take place over H1 2026. That commitment was entirely absent from prior wholesale markets supervisory communications.

The FCA will also review wholesale conduct rules for potential improvements to support UK growth – a further signal that the direction of travel is towards proportionate deregulation, not additional prescription.

Practical Steps for Firms

Engage proactively with market reforms and transparency initiatives, providing timely and accurate data to support market transparency and price discovery.
Prepare for T+1 settlement, dematerialisation of shares, and digitalisation of market processes, and consider how technology can streamline operations and reduce settlement risks.
Respond to the consultation on reforming the UK securitisation framework (CP26/6): final rules are expected in H2 2026.
Engage with the FCA's consultation on equity market structure and transparency following responses to Chapter 4 of CP25/20.
Monitor the SMCR review and engage to shape the outcome: this is a rare opportunity to reduce structural regulatory burden.

Priority 3: Enable the safe and responsible adoption of new technology

The FCA is prioritising the safe and responsible adoption of new technologies across UK wholesale markets, including AI, digital assets, and quantum computing, to support innovation, competitiveness, and effective market functioning. However, strong governance, testing, and oversight are essential to protect consumers and market integrity from the associated risks.

What is new?

The FCA's treatment of technology risk in earlier portfolio letters was broadly cautionary. The tone in this report is materially different – genuinely expansive on opportunity while more precise about governance expectations. The FCA's own survey data illustrates the challenge: only 34% of firms surveyed said they have complete understanding of their AI, while 46% reported only partial understanding, especially where third-party models are used.

A third of artificial intelligence (AI) use cases are third-party implementations, with the top three providers accounting for 73% of cloud, 44% of model, and 33% of data providers. That concentration is now a supervisory concern in its own right. On digital assets, the FCA will publish its final policy statements on the cryptoasset regime in 2026 – providing long-awaited regulatory certainty. The Digital Securities Sandbox, operated alongside the Bank of England, and the forthcoming DIGIT Pilot for digital gilts are innovations without precedent in previous supervisory communications to this sector.

Practical steps for firms

Establish clear accountability, risk management, and oversight for the use of AI, distributed ledger technology, quantum computing, and other new technologies – test and validate rigorously before deployment.
Assess and monitor risks from third-party technology providers, ensuring data privacy, security, and resilience.
Experiment and innovate using FCA sandboxes to trial new technologies in a controlled environment and share learning and best practices.
Prepare for heightened FCA scrutiny: the FCA will continue engagement with wholesale banks, principal trading firms, and credit rating agencies to understand their use of AI, governance, testing, oversight, and third-party risk management.
Monitor the FCA/Bank of England AI consortium outputs and the fourth survey of AI and machine learning in UK financial services, due to be conducted later this year.

Priority 4: Prevent financial crime and market abuse

Combating financial crime and market abuse is a core FCA priority, essential to protecting consumers and market integrity, with risks evolving due to technology, geopolitics and increasingly complex market structures. The numbers concentrate the mind: in 2025, the FCA received 3,806 suspicious transaction and order reports (STORs), with 82% attributed to insider dealing.

What is new?

Previous portfolio letters acknowledged financial crime risk as a standing concern. This report is more candid about what the FCA has actually found. The FCA has identified gaps in some firms' anti-money laundering and market abuse frameworks, including weak business-wide risk assessments, over-reliance on third-party due diligence, and underestimation of money-laundering risks.

It has also identified gaps in market abuse surveillance, with incomplete or inaccurate data feeds, ineffective alert calibration, and weak testing and governance of surveillance models. The FCA's enforcement record reinforces the message: the Final Notices against Barclays, the London Metal Exchange, Sigma Broking, and Mako Financial Markets Partnership LLP (all issued in the past year) demonstrate that supervisory concern translates into regulatory consequence.

Equally notable is a new, more proportionate strand to the FCA's thinking: the FCA wants to explore ways to reduce duplication and compliance burden for lower-risk activity, using technology, data, and trusted digital identity to deliver material efficiency gains for firms whilst maintaining high standards of financial crime prevention.

Practical steps for firms

Maintain robust and proportionate financial crime controls, ensure effective oversight of appointed representatives, and implement policies to manage financial crime risks arising from their activities.
Implement a risk-based, proportionate framework to detect and deter market abuse, using appropriate information controls, surveillance, and escalation and reporting processes for suspicious activity – and ensure complete and accurate transaction reporting.
Review surveillance model calibration, data feed integrity, and governance frameworks against the FCA's published findings from its multi-firm work on off-channel communications and corporate finance firms' financial crime controls.
Engage with the FCA's consultation on improving the UK transaction reporting regime (CP25/32), with a policy statement expected in Q3 2026.

Priority 5: Ensure firms effectively manage conflicts of interest and conduct oversight

Trust underpins effective wholesale markets activity: even sophisticated counterparties can receive poor outcomes when dealing with firms whose conflicts are not disclosed. Where conflicts are poorly managed, confidence erodes, competition weakens, and markets become more cautious and costly.

What is new?

The FCA's conflict of interest agenda has widened considerably. The FCA will initiate a broad supervisory strategy to address and mitigate conflicts and inadequate conduct in the trading and originating activities of wholesale banks in securities markets, including multi-firm reviews of market soundings, prime services, execution in emerging markets, allocation of primary market fixed income products, and quantitative investment strategies.

That is a substantially more targeted and expansive programme than anything communicated in previous portfolio letters. The FCA has found that revenue-driven pay structures may not yet be sufficiently aligned with prudent risk management outcomes – a pointed observation that will require boards to scrutinise remuneration arrangements, not merely note them.

The FCA will also continue its work to address concerns about the application of the Consumer Duty for firms primarily engaged in wholesale activity, consulting on any change in the first half of 2026 – a concession to industry feedback that was not signalled in prior communications, and one that could meaningfully reduce compliance burden for qualifying firms.

Practical steps for firms

Demonstrate that conflicts of interest are identified and managed so that decisions and behaviours consistently support fair client outcomes – paying particular attention where firms are adapting to additional responsibilities, new regimes, or new technologies.
Identify conduct risks early, escalate and address them to prevent harm, with clear accountability and assurance.
Wholesale banks should review conflict management frameworks across best execution, share buybacks, transaction governance, prime services, and quantitative strategies in anticipation of the FCA's multi-firm review programme.
Corporate finance firms should assess the independence and challenge capability of their compliance functions ahead of the FCA's planned review.
Monitor the FCA's review of pre-hedging rules following IOSCO's recommendations and its review of its position on payment for order flow – both are expected in 2026.

Additional areas requiring attention

Beyond the five headline priorities, firms should note the following:

Governance: Good governance underpins oversight, risk management, and compliance. The FCA continues to see weaknesses, including examples of ineffective and immature boards and management bodies. Wholesale brokers, trading venues, benchmark administrators, and credit rating agencies face specific governance reviews in 2026.
ESG ratings: The FCA will publish final rules for ESG ratings in Q4 2026 following its consultation (CP25/34). Firms providing ESG rating services should monitor this carefully.
IFPR review: The FCA will begin a post-implementation review of the Investment Firms Prudential Regime to check that the regime remains fit for purpose and to consider how it can be better aligned with the new COREPRU framework.
Tokenisation: The FCA will engage with stakeholders on tokenised securities and gather feedback on its regulatory principles and vision for distributed ledger technology in wholesale markets, complementing existing work on the Digital Securities Sandbox, Project Guardian, and other tokenisation initiatives.
Data quality: Benchmark administrators have been found to be operating with immature data onboarding processes and inconsistent end-to-end controls across benchmark creation, calculation, and rebalancing. Expect supervisory engagement in H1 2026.

Conclusion

The FCA's inaugural Regulatory Priorities report for wholesale markets is a document that repays careful reading at the most senior level – and demands a strategic response, not a compliance filing exercise. What distinguishes it from the portfolio letter model it replaces is a dual character that firms must hold in tension simultaneously.

On one hand, the FCA is giving wholesale market participants more flexibility to take risk-based decisions, streamlining its rules, and imposing fewer prescriptive or pre-emptive checks – a pro-growth posture more explicit than anything seen in recent supervisory history. On the other, the FCA's enforcement record in wholesale markets has grown markedly more concrete: Final Notices against the London Metal Exchange, Barclays, and Sigma Broking issued within the past year demonstrate that the regulator's stated willingness to act is not rhetorical. Where serious failings are identified, the FCA will consider all available tools, including enforcement investigations.

The five priorities in this report: resilience, market efficiency, technology, financial crime, and conflicts of interest - span every corner of the wholesale markets universe, and the volume of live consultations, planned multi-firm reviews, and supervisory programmes means that the pressure will not ease in 2026. Firms that engage proactively – responding to consultations on securitisation, equity market structure, transaction reporting, client categorisation, and SMCR reform – will help shape a regulatory framework that is being redrawn in real time.

The FCA welcomes feedback on these reports, challenges to its thinking, and collaborative engagement as it refines its new supervisory model. Those that treat this report as an administrative formality will find themselves governed by rules they had every opportunity to influence, and supervised with an intensity that reflects the risks they failed to address. The FCA has drawn a clear line. The only question that remains is which side of it your firm intends to stand on.