1. UK — Enforcement
2. UK — IFPR
3. UK — Appointed Representatives Regime
4. UK — FCA
5. UK — Non-Financial Misconduct
6. UK — Cryptoassets
7. UK — Algorithmic Trading (MiFID)
8. UK — Private Stock Market
9. UK — ESG
10. UK — UK EMIR
11. UK — Anti-Money Laundering
12. EU — Securitisation Regulation
13. EU — Cross-Border Distribution of Funds
14. EU — NBFI
15. EU — Cryptoassets
1. UK — Enforcement
West brothers sentenced for insider trading and fined £280,000
On 1 September 2025, the FCA announced that Matthew and Nikolas West, both experienced traders, have been sentenced for insider dealing.
Through its market surveillance tools, the FCA discovered that the brothers had coordinated trades resulting in nearly £43,000 of profit within minutes of receiving confidential information.
The brothers were ordered to pay back the full value of the shares traded — more than £280,000 — rather than only the profit made.
Matthew West was regularly approached by brokers with investment opportunities, often relating to companies listed on the Alternative Investment Market, subject to strict confidentiality requirements. While he received the information through legitimate communications, he unlawfully disclosed the information to his brother.
Matthew West was sentenced to 15 months’ imprisonment, suspended for two years, with an unpaid work requirement of 200 hours. Nikolas West was sentenced to six months’ imprisonment and suspended for 12 months.
The case follows other recent FCA enforcement actions on market abuse, including the convictions of Redinel Korfuzi and Oerta Korfuzi for insider dealing, as discussed in our July 2025 Update, and the bans imposed on three former Mizuho International plc bond traders for market manipulation, as discussed in our August 2025 Update.
FCA secures convictions against individual for £1.3m Ponzi scheme
On 7 August 2025, the FCA announced that it had secured a conviction against Daniel Pugh for a £1.3 million Ponzi scheme.
Pugh took money from 238 investors through the fraudulent Imperial Investment Fund. The investors were largely targeted through Facebook adverts and were offered “impossibly high” returns of 1.4% per day, 7% per week, or 350% per year.
Pugh was found guilty of fraud following a prosecution brought by the FCA. At the start of the trial, Pugh pleaded guilty to carrying out unauthorised regulated activity in breach of Section 19 of the Financial Services and Markets Act 2000 (FSMA) and breaching the financial promotions restriction in Section 21 of FSMA.
The FCA will shortly commence confiscation proceedings to recover the proceeds of crime. A further individual remains wanted in relation to the same offences.
FCA publishes updated Enforcement Information Guide
On 6 August 2025, the FCA published an updated Enforcement Information Guide.
The Enforcement Information Guide provides information on matters including the FCA’s enforcement powers under FSMA, the typical process for an enforcement case under such powers, options for early settlement and referral of decisions to the Upper Tribunal (Tax and Chancery Chamber).
The updated guidance is intended to supplement the FCA’s new Enforcement Guide, for further details of which see our June 2025 Update.
2. UK — IFPR
FCA publishes IFPR newsletter
On 1 September 2025, the FCA published the latest edition of its IFPR newsletter.
In its newsletter, the FCA makes the following observations.
- Common equity tier 1 (CET1) items of limited liability partnerships (LLPs). The FCA has observed firms set up as LLPs incorrectly treating allocated profits as a CET1 item for purposes of their own funds requirements. Whether LLP profits classify as CET1 depends on the terms of the LLP agreement and the nature of the members’ rights to those profits.
Where profits are automatically allocated to members, who have immediate and unconditional rights to withdraw such profits, these amounts cannot qualify as CET1 (notwithstanding that they may appear as equity in the balance sheet).
However, where the LLP agreement restricts members’ access to such profits, and the LLP retains an unconditional right to refuse to make them available to partners, they may be capable of qualifying as CET1, provided the other eligibility conditions are met.
- Common errors in MIF007 reporting. Firms are frequently misreporting their Own Funds Threshold Requirement and Liquid Assets Threshold Requirement in their MIF007 returns, such that reported figures do not correctly correspond to related fields.
The FCA suggests that firms urgently review their prudential reporting processes to ensure alignment with relevant guidance. The FCA may engage with firms that demonstrate persistent reporting errors.
- Notification of changes to an investment firm group (IFG). Firms are reminded that they must notify the FCA as soon as they become aware of the creation of, or changes to, an IFG, and must ensure the FCA has up-to-date data on their IFG.
- K-AUM calculation. The FCA notes that some firms are unclear on which monthly values to include in their assets under management (K-AUM) calculation. A worked example of a K-AUM calculation is provided to clarify this issue.
- ICARA approval. Firms are reminded to ensure a reasonable time period between completion of their Internal Capital Adequacy and Risk Assessment (ICARA) and approval of their ICARA by the firm’s governing body. The FCA notes that a longer time period between these steps in the process runs the risk of information put to the governing body becoming outdated.
- Accounts submissions — small companies exemption. The FCA estimates that 10% of Markets in Financial Instruments Directive (MiFID) firms may have incorrectly claimed the small companies exemption under the Companies Act 2006 (CA06) in respect of accounts submissions. The FCA notes that even if a firm satisfies the size criteria for the small companies exemption, it is excluded from the small companies regime if it is a “MiFID investment firm” as defined under the CA06.
3. UK — Appointed Representatives Regime
HM Treasury outlines approach to Appointed Representative regime in UK financial services
On 11 August 2025, HM Treasury published a policy statement outlining its intended approach to the Appointed Representatives (AR) regime in UK financial services.
The AR regime allows an unregulated person to carry out certain regulated activities under the supervision and responsibility of an authorised firm (its principal).
HM Treasury notes its intention to preserve the current scope of the AR regime, proposing targeted reforms only, as follows:
- Permission to use ARs. Requiring firms to obtain prior FCA permission to appoint ARs. This would enable the FCA to scrutinise applicants to ensure they are suitable and properly equipped to act as principals. HM Treasury notes that it is does not intend to require existing principal firms to apply for the new permission.
- Financial Ombudsman Service (FOS). Introducing FOS coverage for unresolved consumer disputes involving an AR where the principal is not responsible for the issue in dispute, addressing an existing gap in the framework.
4. UK — FCA
FCA publishes multi-firm review into off-channel communications
On 7 August 2025, the FCA published its findings on firms’ approaches to off-channel communications — meaning communications that take place outside of monitored, recorded channels that a firm has permitted.
The review will be relevant to all firms in scope of the FCA’s recordkeeping rules in Chapter 10A of the Senior Management Arrangements, Systems, and Controls (SYSC) sourcebook, including FCA-authorised investment firms and alternative investment fund managers (AIFMs).
All surveyed firms provided evidence of action taken to improve their approaches to off-channel communications, with steps taken in relation to their control frameworks, surveillance, use of third-party vendors for monitoring and recording of different channels, management information, and consequence management.
The FCA states that firms may wish to review their approach to off-channel communications in light of its findings.
Issues that firms should consider include whether employees fully understand their responsibility to record all relevant communications, whether leadership sets a strong “tone from the top” and encourages a “speak up” culture for SYSC 10A compliance, and whether there are any unreasonable barriers preventing staff from following the policy framework effectively.
FCA publishes insights from wholesale banks review
On 7 August 2025, the FCA published insights from its multi-firm review of wholesale banks, focussing on the topics of off-channel communications, gifts and entertainment, conflicts of interest, and market abuse, among others.
While the firms surveyed were wholesale banks, the FCA’s findings are relevant to all firms subject to FCA rules in these areas.
Findings of particular relevance to asset managers include the following:
- Off-channel communications. Please see the item above for the FCA’s findings on this topic.
- Gifts and entertainment (G&E). The FCA reviewed firms’ G&E registers and found that most entries related to entertainment rather than gifts. The FCA also found discrepancies in the recording of entries and in groups of employees failing to record entertainment received.
- Conflicts of interest registers and breach data. While most firms updated their conflicts scenarios to reflect changes in business scope (e.g., expansion into new markets or products), one firm had not updated its business-related scenarios for three years. Additionally, whereas most firms also had records of conflicts breaches, one firm stood out as having recorded no conflicts breaches over a three-year period. Firms are encouraged to challenge whether their controls are strong in such cases.
- Inside information. The FCA has observed issues where insider lists have not been well maintained. In one instance, multiple information technology (IT) employees had access to folders containing inside information but were not tracked by the control room. In another instance, committee members were wall-crossed but not added to the insider list. The FCA intends to follow up on these observations to determine if these types of issues are more systemic.
FCA publishes blog on non-bank leverage
On 11 August 2025, the FCA published a blog post by Sarah Pritchard, FCA Deputy Chief Executive, outlining reflections on her role as co-chair of the Financial Stability Board (FSB) working group on non-bank leverage, and the FCA’s priorities for the UK.
The blog post refers to the FSB’s recently published report on leverage in non-bank financial intermediation, which issued policy recommendations to FSB member authorities to address financial stability risks created by non-bank leverage. For details on the FSB’s report, please see our August 2025 Update.
On the FCA’s work in this area, Pritchard notes that the FCA is already taking steps to evaluate what data it needs and discontinuing regulatory reporting returns that are no longer relevant. There is an ongoing work programme to determine which risk metrics are most crucial for the FCA in future and how it can best align its approach with other jurisdictions.
FCA simplifies supervisory communications and data returns
On 28 August 2025, the FCA announced that it is simplifying its multi-firm and thematic reviews and labelling those published before 2022 as “historical” to make it easier for firms to find up-to-date supervisory communications.
On the same date, the FCA announced that firms no longer need to submit nil returns for their Conduct Rules reporting (REP008); if the firm has not taken disciplinary action for a Conduct Rule breach, no action is required for that reporting period.
Berne Financial Services Agreement for UK and Swiss firms
On 15 August 2025, the FCA updated its webpage on the Berne Financial Services Agreement (BFSA), adding a number of questions and answers (Q&As) based on feedback from firms.
The Q&As address matters including the application process, timeframes, and eligibility requirements.
The BFSA is intended to make it easier for UK and Swiss firms to take part in cross-border trade from 2026 onwards, using outcomes-based mutual recognition. For details on the BFSA, please see our January 2024 Update.
5. UK — Non-Financial Misconduct
Rise in culture complaints at UK firms
On 13 August 2025, the FCA published its latest whistleblowing quarterly report for Q2 2025.
The report indicates that among a total of 315 whistleblowing reports received by the FCA during Q2, 147 reports related to firm culture, an increase of 71% compared with the previous quarter (when the FCA received 86 reports on this issue).
This made culture the third-most common allegation reported by whistleblowers in Q2 2025, following compliance (199 reports) and fitness and propriety (162).
The data comes at a time that the FCA is increasingly focussing on workplace culture at firms, having recently finalised its rules on non-financial misconduct for non-banks, as discussed in our Sidley Update, UK FCA Sharpens Focus on Culture: Expanding the Reach of Non-Financial Misconduct Regulation.
6. UK — Cryptoassets
FCA opens retail access to crypto ETNs
On 1 August 2025, the FCA announced that it will lift the ban on the sale, marketing, and distribution of certain crypto exchange traded notes (cETNs) to UK retail clients, with effect from 8 October 2025.
This follows the FCA’s ban in January 2021 on the sale, marketing, and distribution of cryptoasset derivatives and cETNs to retail clients.
Retail access will be limited to cETNs admitted to trading on a UK-recognised investment exchange. These products will be subject to strict controls under FCA financial promotions rules, including appropriateness testing and prescribed risk warnings.
Firms will also be expected to comply with the Consumer Duty in respect of retail distribution of cETNs, including ensuring good consumer outcomes and clearly defining and serving their target market.
The FCA ban on retail access to cryptoasset derivatives remains in place.
7. UK — Algorithmic Trading (MiFID)
FCA’s observations on multi-firm review of algorithmic trading controls
On 21 August 2025, the FCA published the findings of its multi-firm review on principal trading firms’ compliance with MiFID Regulatory Technical Standards (RTS) 6 on algorithmic trading controls.
The FCA reviewed 10 firms’ most recent self-assessments to assess compliance with RTS 6 as well as the quality of the assessments and supporting evidence.
Key findings:
- Governance
- Self-assessment documentation varied widely in level of detail. Some firms’ self-assessments were lacking in detail or did not address certain RTS 6 requirements, such as IT outsourcing and compliance training.
- While some firms’ compliance staff had strong technical knowledge, others did not, which limited their ability to challenge trading behaviours and their involvement in key trading processes.
- While many firms maintained a detailed inventory of algorithmic trading strategies and systems, in some cases the inventory did not specify the individuals approved to operate the algorithm.
- Some firms had outdated or unclear policies for testing and deploying algorithms or did not provide management information to the board on deployments. Some firms that used third-party algorithms did not have a good technical understanding of the algorithms’ development.
- Development and testing
- Firms varied in the clarity of their policies as to scenarios in which conformance testing was required.
- Regarding simulation testing, while some firms dedicated significant resources and expertise to ensuring this was as robust as possible, other firms lacked sophistication in their approach, did not consider a wide range of market scenarios, or lacked formally documented testing procedures.
- While firms generally took a conservative approach to deploying algorithms, some firms lacked formal documented procedures on this or did not clearly set out ownership of key elements of the process.
- Pre/post trade controls. All firms had pre-trade controls in place. However, certain firms did not clearly define and document ownership of pre- and post-trade controls, and in certain cases there was an absence of compliance oversight.
- Market abuse surveillance. Many firms had customised their surveillance systems to the type of trading they carried out, regularly discussed market abuse alert logic calibration at relevant governance committees, and had clear escalation procedures for alerts. However, some firms had not invested sufficiently in surveillance systems commensurate to the scale and complexity of their trading or lacked formalised procedures on alert investigation, resulting in alerts taking longer to be investigated and closed.
The FCA encourages firms to consider which findings may be relevant to their control framework. It intends to continue to assess algorithmic trading controls as part of its ongoing supervisory work.
8. UK — Private Stock Market
First PISCES operator gets greenlight
On 26 August 2025, the FCA announced that it had granted approval to the London Stock Exchange to operate the first Private Intermittent Securities and Capital Exchange System (PISCES) platform.
PISCES is a new regulatory framework designed to enable periodic trading of private company shares within a regulated secondary market and will be the world’s first regulated private stock market.
For further details on PISCES, please see our June 2025 Update.
9. UK — ESG
FCA outlines findings and next steps following review into firms’ climate reporting
On 6 August 2025, the FCA published the findings of its review into firms’ compliance with its climate disclosure rules.
The rules require asset managers and certain FCA-regulated asset owners to disclose climate-related information in line with the Task Force on Climate Related Financial Disclosures (TCFD) recommendations (the TCFD Rules).
For further details on the TCFD Rules, please see our Sidley Update, New UK FCA Rules on Climate-Related Disclosures — Ten Key Points for Asset Managers.
The FCA’s findings include the following:
- Risk management: Firms noted that the TCFD Rules have helped them to consider climate change as a material risk, build their capabilities, and integrate climate risks and opportunities into their strategies.
- Audience: Firm feedback noted that while detailed climate disclosure information is helpful for institutional investors, the disclosures may be too complex for retail investors.
- Accessibility: While entity reports were broadly accessible from a firm’s main webpage, product reports were often difficult to find, resulting in lower engagement by retail investors.
- Data: While firms were able to report on backward-looking data, such as carbon emissions, some found it more challenging to provide quantitative data to support forward-looking disclosures, such as scenario analysis. Only around half of the product reports disclosed the impact of all three climate scenarios on the fund, as required.
- Proportionality: Asset managers noted that they are required to report under multiple sustainability disclosure regimes and considered the TCFD Rules too granular.
- Regulatory clarity: Firms asked the FCA to clarify the future of the TCFD rules, in light of the broader direction of travel towards the International Sustainability Standards Board Standards, globally and in the UK, and the need to consider international consistency while working with industry to develop a future regime practical for firms.
The FCA has updated its sustainability reporting requirements webpage to clarify how firms in scope of both the TCFD and Sustainability Disclosure Requirements rules can report efficiently under both regimes.
The FCA is also considering how best to streamline and enhance its sustainability reporting framework and plans to engage further with industry.
10. UK — UK EMIR
FCA launches third consultation on additional draft guidance for derivative reporting requirements
On 8 August 2025, the FCA launched a third consultation alongside the Bank of England on draft Q&As for counterparties reporting under the revised UK European Market Infrastructure Regulation (UK EMIR) Article 9 reporting requirements.
The two additional Q&As relate to the scenarios in which it is acceptable to report with a technical International Securities Identification Number and how an FX swap contract should be reported (contrasting the approach for those executed as two FX forward contracts, and those concluded as a single FX swap contract).
Feedback is requested by 12 September 2025.
11. UK — Anti-Money Laundering
HM Treasury publishes proposed amendments to the UK Money Laundering Regulations
On 2 September 2025, HM Treasury published draft regulations (the Draft SI) amending the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), together with a policy note setting out its policy intention.
The Draft SI sets out targeted amendments to the MLRs to address regulatory gaps, enhance proportionality, and address emerging risks. Proposed changes relate to customer due diligence, pooled client accounts, cryptoasset regulation, and trust registration.
Proposals of most interest to asset managers include changes to the circumstances requiring enhanced due diligence (EDD). In particular:
- High-Risk third countries. Firms are currently required to apply EDD to transactions or customers involving “high-risk third countries,” defined as any country on the Financial Action Task Force “increased monitoring” and “call for action” lists. The Draft SI narrow this to countries on the “call for action” list only.
- Complex and large transactions. The Draft SI clarifies that EDD is required only for transactions that are “unusually complex or unusually large” relative to what is typical for the sector or the nature of the transaction.
Responses are due by 30 September 2025. The legislation is expected to be laid before Parliament in early 2026.
12. EU — Securitisation Regulation
European Banking Authority publishes new Q&A on the EU Securitisation Regulation
On 8 August 2025, the European Banking Authority published new single rulebook Q&A in respect of the EU Securitisation Regulation, setting out responses provided by the European Commission (Commission).
One of the new Q&A (2021_5851) addresses the question of whether an entity who manages and establishes a traditional securitisation can be classified as the “originator,” and hence an eligible risk retainer, by entering into a conditional sale agreement with the securitisation special purpose entity (SSPE) instead of purchasing the assets and then selling the same to the SSPE.
The Commission’s response is that if an entity has not purchased the assets but has entered into a conditional sale agreement with the SSPE whereby the entity is obliged to acquire relevant assets from the SSPE, such entity does not qualify as an originator and therefore cannot fulfil the risk retention requirement on this basis.
The other Q&A relate to:
- the meaning of “established in the Union”; and
- the application of the originator definition to a branch of a credit institution.
13. EU — Cross-Border Distribution of Funds
ESMA publishes summary of EU national provisions on fund marketing
On 21 August 2025, ESMA published a document summarising EU member state national provisions concerning marketing requirements for alternative investment funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS), in accordance with ESMA’s obligations under the Cross-Border Distribution of Funds Regulation.
The document also includes hyperlinks to EU member state regulators’ websites setting out applicable national laws, regulations, and administrative provisions on marketing requirements for AIFs and UCITS and lists of the fees and charges they levy for carrying out their duties in relation to the cross-border activities of fund managers.
14. EU — NBFI
ESRB publishes NBFI Risk Monitor report
On 1 September 2025, the European Systemic Risk Board (ESRB) published the 2025 edition of its EU NBFI risk monitor report.
The report provides an overview of cyclical and structural vulnerabilities in the non-bank financial sector, focussing on asset management, in particular AIFs, UCITS, and other financial institutions (OFIs).
The ESRB notes that in 2024, total assets of investment funds and OFIs exceeded the size of the banking sector and that non-banks faced heightened cyclical risks driven by macroeconomic vulnerabilities, asset price volatility, and reduced market liquidity.
The reports finds that leverage, liquidity mismatches, and interconnectedness remain key vulnerabilities across the NBFI sector. Though typically associated with AIFs, the report notes that high leverage is also prevalent in certain UCITS funds designed for retail investors, noting that such funds pursue hedge fund-like strategies, exposing them to significant market and liquidity risks.
The ESRB notes that these vulnerabilities are further compounded by data gaps, poor data quality, and obstacles to data sharing, which hinder effective monitoring and risk assessment.
The ESRB’s recommendations include enhanced regulatory oversight, harmonised leverage rules, and improved data frameworks to support financial stability monitoring.
15. EU — Cryptoassets
Final RTS on market abuse under MiCA published
On 20 August 2025, Commission Delegated Regulation 2025/885 was published in the Official Journal of the EU, setting out RTS on the market abuse requirements of the EU MiCA.
The RTS specify the arrangements, systems, and procedures to prevent, detect, and report market abuse, the templates to be used for reporting suspected market abuse by way of suspicious transaction and order reports, and the coordination procedures among the competent authorities for the detection and sanctioning of market abuse in cross-border market abuse situations.
The delegated regulation enters into force on 9 September 2025.
