UK/EU Investment Management Update (August 2026)

In this Sidley Update, we cover, on the UK side, the Financial Conduct Authority’s (FCA) package of proposals to streamline the asset management rulebook; final rules simplifying UK Markets in Financial Instruments Regulation (MiFIR) transaction reporting; the FCA's findings on financial crime controls at asset management and alternatives firms; findings from its Consumer Duty outcomes monitoring review; HM Revenue & Customs (HMRC) consultations on modernising the distributions framework, tax reform on UK resident members in limited liability companies (LLCs), and new stamp tax legislation; a webinar introducing the new cryptoasset regime; the finalised framework for a UK equity consolidated tape; and an enforcement update on the recovery of victims’ funds from a convicted investment fraudster.

On the EU and international side, we cover the European Securities and Markets Authority’s (ESMA) compliance table for the liquidity management tools guidelines for Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs); its call to finalise preparations for T+1 settlement; the European Supervisory Authorities' proposed simplification of the bilateral margin requirements; the authorisation of the first EU consolidated tape provider for shares and exchange-traded funds; the launch of the first phase of the European Single Access Point; new regulatory Q&As on environmental, social, and governance (ESG) ratings, cryptoassets and the consolidated tape; the EU's 21st package of sanctions against Russia; the start of enforcement of the EU Artificial Intelligence Act; the European Financial Reporting Advisory Group's (EFRAG) consultation on sustainability reporting standards for certain non-EU undertakings; and the International Sustainability Standards Board’s (ISSB) proposed update to its digital sustainability taxonomy.

1. UK – Asset Management Reform
2. UK – MiFIR Transaction Reporting
3. UK – Financial Crime
4. UK – Consumer Duty
5. UK – Tax
6. UK – Cryptoassets
7. UK – Consolidated Tape
8. UK – Enforcement
9. EU – AIFMD/UCITS
10. EU – CSDR
11. EU – EMIR
12. EU – Consolidated Tape
13. EU – Capital Markets Data
14. EU – Regulatory Q&As
15. EU – Sanctions
16. EU – Artificial Intelligence
17. EU – ESG
18. International – ESG

1. UK – Asset Management Reform

FCA consults on a streamlined asset management rulebook

On 14 July 2026, the FCA published a package of consultations intended to tailor its requirements for asset managers, cut costs for firms, and improve the data the FCA collects to supervise the sector. The FCA estimates that the package will save asset managers approximately £128 million a year, with a large share of the savings expected to come from a new, more targeted fund reporting regime.

The package delivers proposed reform of the UK Alternative Investment Fund Managers Directive (AIFMD) regime that the FCA had signalled in its private markets work and Regulatory Initiatives Grid, as covered in our June 2026 Update, comprising three linked consultations of direct relevance to UK asset management firms:

• UK AIFM Regime (CP26/28). The FCA proposes to modernise and simplify the AIFMD-derived rules, and to replace them with a more flexible, tailored and proportionate framework, while maintaining clear standards. Key proposals include:
  
  • New three-tier NAV-based regime. Alternative Investment Fund Managers (AIFMs) to be categorised with graduated requirements based on aggregate Net Asset Value (NAV) as Small (<£750 million), Medium (£750 million to £5 billion) or Large (>£5 billion) AIFMs. This represents a change from the current thresholds that are calculated by assets under management.
  • Valuation. Small AIFMs will only be subject to certain baseline requirements, such as the obligation to ensure valuations are carried out properly and in good faith, at fair value. Small and Medium AIFMs need to ensure that valuations are carried out “separately” from the portfolio management function. Only Large AIFMs will be required to ensure that valuations are carried out “independently” of the portfolio management function.
  • Leverage. Removal of gross/commitment method – more flexible disclosure to investors based on a general “fair, clear and not misleading” standard.
  • Delegation. Removal of the need for AIFMs to seek prior approval to delegation arrangements (set out in the draft AIFMR 2026 discussed below), with the FCA proposing that AIFMs notify it of delegation arrangements as soon as possible.Pre-contractual disclosures (current Article 23 supplement). Move from prescriptive to principles-based regime, to apply to AIFMs of all sizes (unless there are retail investors); includes reductions to mandatory pre-contractual and periodic disclosures.
  • AIF annual report. Removal of “all staff” remuneration disclosure requirements and limiting disclosure to Material Risk Takers (MRTs) only.
  • National Private Placement Regime (NPPR). HMT proposes to retain the NPPR in primary legislation with limited changes.
  • AIFM business restriction. Removal of business restriction (AIFMs are currently permitted to carry on only certain Markets in Financial Instruments Directive (MiFID) activities; in particular, an AIFM is not able to execute orders on behalf of others).
  • Reviewing the prudential regime for fund managers. Consulting on bringing fund managers within the scope of the new Core Prudential Sourcebook (COREPRU). COREPRU is the integrated prudential framework the FCA has developed as the common baseline for firms subject to FCA prudential regulation.

The consultation closes on 14 October 2026, although certain chapters (e.g. AIFM business restriction) have an earlier deadline of 18 September 2026.

• Fund Reporting for Asset Management Entities (FRAME) (CP26/26). The FCA proposes a new fund reporting regime to improve the quality and consistency of data reported to the FCA by replacing the current reporting requirements with a single framework calibrated to the type, size and activity of the fund (with “Essential” and “Enhanced” features). Key proposals include:
  • Fund-level tiering. Funds below £500 million NAV submit an “Essential” report. Funds with NAV of £500 million or more submit an “Enhanced” report (Essential + top-up elements).
  • Frequency and lag. Set by fund type, not AUM, e.g. AIFMs managing “hedge funds” (per new FCA definition) would report quarterly, with a 45-day lag.
  • Essential Reporting. Seven sections including general information, investor base and distribution, performance, flows and liquidity and counterparty exposure (for hedge funds and funds using leverage for investment purposes).
  • Enhanced Reporting. Nineteen sections building on Essential, including further details on liquidity, portfolio exposures and collateral. Applicability depends on fund type and activity (e.g. specific sections for “private market” funds, including loan origination funds).Event-based reporting for hedge funds. New event-based reporting requirement for hedge funds where fund NAV falls 10% or more over 10 consecutive business days. Prescribed form to be sent to FCA within 72 hours of event.
  • Segregated Portfolio Manager and Adviser Reporting. Separate streamlined annual return proposed for UK MiFID portfolio managers and advisors (including collective portfolio management investment ( CPMI) firms) acting for AIFMs and other institutional clients, including CPMI firms.

The consultation closes on 22 September 2026.

• Remuneration reform for solo-regulated firms (CP26/27). The FCA proposes to replace the overlapping AIFM, UCITS and MIFIDPRU remuneration codes with a consolidated clearer, more proportionate framework. Key proposals include:
  • Outcomes focused approach. Shift from prescriptive rules to an outcomes-focused framework, with greater reliance on firm governance and management body judgement.
  • Application and structure. New code applies to all staff through general remuneration requirements, with additional targeted provisions for MRTs.
  • MRT definition. Narrowed to include staff whose activities have a material impact on the firm, investors or regulatory compliance.
  • Variable remuneration. More flexibility on fixed/variable remuneration split, guaranteed variable remuneration and deferrals. Malus/clawback not mandatory.
  • Governance. Remove the requirement for mandatory Remuneration Committees and annual independent reviews.
  • Reporting. For MIFIDPRU firms, revoke the MIF008 remuneration reporting template and the corresponding reporting requirement and public remuneration disclosures (MIFIDPRU 8.6), with firms expected to maintain appropriate internal records.

  The proposals apply to full-scope AIFMs, UCITS management companies and non-small and non-interconnected (non-SNI) MIFIDPRU investment firms. The consultation closes on 16 September 2026.

HM Treasury Draft Regulations for Alternative Investment Fund Managers

On 14 July 2026, HM Treasury published a draft of The Alternative Investment Fund Managers Regulations 2026 (AIFMR 2026). The AIFMR 2026 will replace the existing Alternative Investment Fund Managers Regulations 2013 which originally implemented the EU AIFMD into UK law, and which was retained in UK law following Brexit.

The draft AIFMR 2026 proposes to:

• Remove most firm-facing requirements to allow new tailored requirements to sit in FCA rules.
• Clarify the definition of an AIF.
• Reform the registration regime, requiring property collective investment schemes to become authorised, while maintaining the regime for Social Entrepreneurship Funds (SEF) and Registered Venture Capital Funds (RVECA) fund managers ahead of a wider reform of Venture Capital Regulation.
• Exempt small internally managed investment companies who meet certain conditions.
• Remove the thresholds at which firms are subject to significantly more requirements, which currently sit in legislation. This will allow the FCA to create a more proportionate regime, with requirements increasing incrementally as firms grow, and only the largest firms being subject to the most prescriptive rules akin to the current full-scope AIFM regime.
• Maintain the NPPR for overseas AIFMs and AIFs while providing the FCA with additional powers to reform reporting requirements for domestic and overseas funds operating in the UK.
• Simplify private equity portfolio company disclosures.
• Make other minor changes to rationalise the regime with how the market functions.

Comments on the draft AIFMR 2026 should be submitted by 14 October 2026.

2 UK – MiFIR Transaction Reporting

FCA finalises rules to simplify MiFIR transaction reporting

On 3 August 2026, the FCA finalised rules (in its policy statement PS26/15) reforming the UK transaction reporting regime under the MiFIR. The FCA estimates the changes will reduce the annual cost of transaction reporting to industry from approximately £493 million to around £385 million, a net saving of about £108 million a year, while preserving the quality of the data the FCA relies on to detect market abuse, monitor market functioning and supervise firms.

The key changes include:

• limiting the scope of the transaction reporting regime to financial instruments tradeable on trading venues in the UK only – this will mean removing reporting requirements for around 7 million financial instruments that are traded only on EU trading venues. The FCA estimates this change will save firms approximately £32 million a year;
• reducing the number of transaction reporting fields from 65 to 52;
• removing foreign exchange derivatives from the reporting requirements, which the FCA expects to reduce costs for more than 400 firms; and
• reducing the period for correcting historical reporting errors from five years to three years.

Importantly for MiFID investment management firms, the industry push to exempt MiFID managers from transaction reporting did not succeed. However, the FCA will be introducing Conditional Single-Sided Reporting (CSSR), which should allow such firms to utilise the existing Article 4 transmission mechanism in MiFID RTS 22.

The new rules take effect on 3 April 2028, giving firms time to prepare, test and implement updated systems, although the FCA has indicated it will take a flexible supervisory approach for firms that are ready to make certain changes sooner. The FCA has also established, with the Bank of England, a cross-industry Transaction and Post-trade Reporting Industry Harmonisation Taskforce, which aims to create a streamlined and harmonised reporting framework across UK MiFIR, UK European Market Infrastructure Regulation (UK EMIR) and UK Securities Financing Transactions Regulation (UK SFTR). These efforts mirror ESMA's work to simplify transaction reporting under the EU version of the aforementioned three reporting regimes, covered in our July 2026 Update.

3. UK – Financial Crime

FCA publishes findings on financial crime controls at asset management and alternatives firms

On 22 July 2026, the FCA published its findings from a review of financial crime controls across the asset management and alternatives sector, following engagement with 242 firms during 2025/26 (87% of which responded to its questionnaire), supplemented by interviews with a smaller sample. The FCA assessed firms’ controls against the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), the Financial Crime Guide (FCG), the SYSC sourcebook and relevant Joint Money Laundering Steering Group (JMLSG) and Financial Action Task Force (FATF) guidance.

On inherent risk, the FCA found that firms active in private markets are generally more exposed to financial crime risk, owing to complex cross-jurisdictional ownership structures, higher-risk customers and international fund flows. Around a fifth of private markets firms reported that more than 30% of their customers use complex ownership structures, and 32% reported politically exposed persons (PEPs) in their customer base, compared with 9% for firms not active in private markets.

On control risks, the FCA identified a number of instances where firms had concerning gaps in their controls, including that:

• just over 20% of firms had either not undertaken a business-wide risk assessment (BWRA) or had one that was incomplete or inadequate;
• 18% of firms had no formal customer risk assessment methodology, and some private markets firms had no formal process for verifying ultimate beneficial owners of complex structures or for classifying customers by risk-level;
• around 40% of firms outsourced elements of financial crime compliance function, but only 36% of those had full oversight of the third party’s onboarding, notwithstanding that firms remain fully responsible for MLR compliance, and 10% of firms did not verify high-risk customers’ source of wealth;
• 29% of firms had no formal transaction monitoring process, and 7% did not conduct repeat screening for sanctions, PEPs and adverse media; and
• half of the firms surveyed reported no investment in uplift of Anti-Money Laundering (AML) systems in the last 24 months, and over a third of firms discussed financial crime risk only annually (or less frequently) at governance forums.

The FCA reminds firms to ensure that their systems and controls, risk assessments, ongoing monitoring, screening, governance and training are commensurate with the inherent risks they face, and states that it will use the questionnaire data in its ongoing supervision and intervene where firms fall short.

4. UK – Market Abuse

FCA's published latest market cleanliness statistics

On 9 July 2026, the FCA published its market cleanliness statistics for 2025. The FCA’s market cleanliness statistic is an annual publication for takeover announcements in the UK equity markets. The statistic reflects the proportion of corporate takeover events for which the FCA observed a significant abnormal movement in share price before the takeover announcement.

The market cleanliness statistic for 2025 was 41.1%, meaning that suspicious share price movements were observed as directly preceding 41.1% of takeover announcements in 2025. This compares to a five-year moving average of 33.74%.

The FCA notes that this statistic is just one indicator of possible insider dealings, capturing only those instances where a takeover offer announcement has caused a positive abnormal price movement in the two days preceding the news.

The publication also shows small increases in two other measures the FCA uses for market cleanliness purposes – the abnormal trading ratio and potentially anomalous trading ratio.

5. UK – Consumer Duty

FCA publishes good and poor practice on Consumer Duty outcomes monitoring

On 27 July 2026, the FCA published the findings of a review into how firms monitor consumer outcomes under the Consumer Duty, drawing on board reports, information requests and a survey of 56 firms across a range of sectors, sizes and business models. The review is relevant to firms that manufacture or distribute products to retail clients, and to senior managers and boards responsible for overseeing outcomes monitoring.

The FCA emphasises that collecting data or listing metrics is not, by itself, sufficient: firms should be able to explain what their information tells them, how they use it to identify risks, what action they take and how they check whether that action improved outcomes. The strongest approaches were structured and coherent, with clear definitions of good outcomes mapped to each stage of the customer journey, data-based decision-making supported by clear thresholds, and governance that provided genuine challenge and tracked actions through to completion.
Common areas for improvement included high-level frameworks that were not linked to defined outcomes or customer journeys; reliance on lagging or operational-activity metrics as a proxy for outcomes; thresholds that firms could not justify; a lack of testing of whether remedies actually worked; insufficiently granular monitoring of outcomes for customers in vulnerable circumstances; and boards that reviewed and approved reports rather than challenging them. The publication also reiterates the FCA's expectations under PRIN 2A.9 and points firms to Chapter 11 of its finalised guidance FG22/5.

6. UK – Tax

Current HMRC consultations

HMRC has recently published a number of consultation papers and draft legislation that are likely to be relevant to investment fund managers. A summary of the key proposals is set out below.

At a high level, HMRC’s proposals include: bringing distributions from non-UK resident companies within the same statutory distributions regime as distributions from UK resident companies, reforming the conditions for capital treatment on a purchase of own shares (i.e. share buy-backs), reviewing the “new consideration” and “repayments of capital” rules (i.e. situations where cash extraction from a company is exempt from dividend treatment), abolishing the capital reduction demerger regime while expanding the statutory demerger rules, and modernising or replacing the “Transactions in Securities” (anti-avoidance) regime.

HMRC recently introduced a consultation on the taxation of UK resident individuals who are members of “reverse hybrid” entities. Reverse hybrids are entities that are taxed transparently (similarly to partnerships) in their jurisdiction of establishment but treated as opaque (similar to corporates) for UK tax purposes.

HMRC’s consultation seeks to resolve this conflict, focussing on mitigating unintended consequences of “reverse hybrid” tax treatment for UK individuals – principally to prevent situations where UK individuals face double tax as a result. The consultation does not consider issues relating to UK non-individuals (e.g. corporates).

7. UK – Cryptoassets

FCA publishes a webinar introducing its rules and guidance for the new cryptoasset regime

On 17 July 2026, the FCA made available an on-demand webinar introducing the UK’s new cryptoasset regulatory framework, which is due to come into force in October 2027, with the authorisation application window opening in September 2026. The webinar is intended to help firms understand the FCA’s rules and prepare for the new regime, the finalised rules and guidance for which were covered in our July 2026 Update.

The webinar introduces the FCA’s policy framework covering stablecoin issuance, admissions and disclosures, market abuse and prudential requirements, and explains how established FCA standards, including the Consumer Duty and the FCA’s expectations on conduct, safeguarding and operational resilience, will apply to UK cryptoasset firms. Firms that carry on, or are considering carrying on, regulated cryptoasset activities or that invest in cryptoassets on behalf of clients may find the webinar a useful orientation ahead of the September 2026 application window.

8. UK – Consolidated Tape

FCA advances a package of equity market transparency reforms

On 31 July 2026, the FCA published a package of reforms designed to improve transparency and access to market-wide information in UK equity markets. The package confirms the framework for a future equity consolidated tape (CT), consults on targeted market structure reforms and, as an interim step, introduces a market activity reporter for shares. The package follows the launch of the UK bond consolidated tape in June 2026, covered in our July 2026 Update.

The framework is set out in the FCA’s policy statement and consultation, CP26/31. The FCA has confirmed that the equity CT will include both post-trade data and the first level of pre-trade data (the attributed best bid and offer), and – as a change from its original proposals – that the CT provider (CTP) must share a portion of its income with data contributors. The final rules, consulted on in CP25/31, came into force on 31 July 2026 and set out the obligations for the CTP and for trading venues and approved publication arrangements to provide data to the CTP once one is appointed.

The market activity reporter for shares introduced by the package of reforms is a free interim tool that publishes a daily estimate of total trading activity in shares on the FCA’s Official List that are executed on UK venues or traded over the counter and reported in the UK. The reporter is an interim solution pending the equity CT, which will take over the reporting of market-wide activity metrics alongside its trade-level data.

The FCA is separately consulting, in a chapter of CP26/31, on whether to require the CTP to publish attributed systematic internaliser (SI) quotes as a standalone SI best bid and offer, and is running a call for input on key contractual requirements for the CTP, including how income sharing should operate and the CTP’s operating hours. The call for input closes on 18 September 2026 and the consultation on SI quotes (together with the related CP26/30 market structure consultation) closes on 16 October 2026. The FCA expects to launch procurement for the CTP in early 2027, with the tape beginning operations in 2027 or early 2028.

9. UK – Enforcement

FCA secures confiscation order returning the majority of victims’ money from a convicted investment fraudster

On 27 July 2026, the FCA announced that it had obtained a confiscation order against John Burford, who was sentenced in September 2025 to two years’ imprisonment for defrauding more than 100 investors of approximately £1 million. Mr Burford had offered trade alerts and investment opportunities in managed “funds” without FCA authorisation, and the FCA found that he had repeatedly misled investors about performance, concealed losses and used investor money for personal gain.

At a hearing at Southwark Crown Court, Mr Burford was ordered to pay £655,951.40 under the Proceeds of Crime Act 2002, representing the value of his available assets, with the funds to be returned to victims. Together with earlier payments, the FCA estimates that nearly all of the money originally invested by the approximately 70 known victims will have been returned. Mr Burford faces a default sentence of up to five years’ imprisonment if he does not pay within three months. While the underlying conduct concerned unauthorised activity aimed at retail investors, the action is a reminder of the FCA’s continued focus on individuals/firms performing regulated activities without due authorisation, and on using confiscation powers to return money to victims.

10. EU – AIFMD/UCITS

ESMA publishes compliance table for its guidelines on liquidity management tools

On 21 July 2026, ESMA published a compliance table for its Guidelines on liquidity management tools (LMTs) by managers of UCITS and open-ended AIFs, the final version of which was covered in our April 2026 Update.

The compliance table records that all EU National Competent Authorities (NCAs), together with the European Economic Area (EEA) European Free Trade Association (EFTA) states, comply or intend to comply with the Guidelines. A number of authorities, including the Danish, Dutch, Finnish, German, Irish, Lux and Swedish regulators indicate that they already comply, while others (including those in Belgium, France, Italy and Norway) intend to comply once the necessary national legislative or regulatory proceedings are complete, in several cases by specified dates. The Guidelines apply from 16 April 2026, with a 12-month transitional period to 16 April 2027 for funds already in existence. For firms managing UCITS or open-ended AIFs, the compliance table confirms that the LMT framework is being embedded across the EU, and managers should verify the applicable position and timing in each jurisdiction in which they operate.

11. EU – EMIR

European Supervisory Authorities propose to simplify the bilateral margin requirements

On 3 August 2026, the European Supervisory Authorities (the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and ESMA – together, the ESAs) published a final report on draft regulatory technical standards (RTS) proposing to simplify the bilateral margin requirements for uncleared over-the-counter (OTC) derivatives under EMIR.

The proposals are aimed at counterparties that were previously above but subsequently fall below the €8 billion aggregate average notional amount (AANA) threshold for exchanging initial margin under EMIR. Under the current framework, such counterparties are exempt from exchanging initial margin for new uncleared OTC derivative contracts but must continue to exchange it for existing contracts. Under the proposed amendments, once a counterparty falls below the threshold it would no longer be required to exchange initial margin for either new or existing contracts, facilitating the phase-out of initial margin requirements for these counterparties and supporting greater consistency with the treatment in other jurisdictions.

The final report has been submitted to the European Commission for endorsement, after which the RTS will be subject to scrutiny by the European Parliament and the Council before publication in the Official Journal. Firms trading uncleared OTC derivatives – including smaller AIFs and other counterparties below the threshold – should welcome the proposed relief but should continue to monitor their threshold status pending the RTS taking effect.

12. EU – Consolidated Tape

ESMA authorises EuroCTP as the consolidated tape provider for shares and ETFs

On 27 July 2026, ESMA authorised EuroCTP B.V. to operate as the consolidated tape provider (CTP) for shares and exchange-traded funds (ETFs) in the EU. The CTP will bring pre-trade and post-trade data from multiple data contributors into a single stream, which ESMA states will support price discovery and more informed investment decisions and contribute to the objectives of the Savings and Investments Union.

ESMA has granted EuroCTP a transition period until 30 September 2026 to finalise operational and technical arrangements, after which it will operate the tape for a five-year period under ESMA’s direct supervision in line with the MiFIR framework. Together with the FCA's equity consolidated tape framework (see Item 2 above), the authorisation means both the UK and the EU are now progressing equity consolidated tapes in parallel, and firms operating across both markets should factor the differing designs and timelines into their market-data and best execution arrangements.

13. EU – Capital Markets Data

ESMA launches data collection under the first phase of the European Single Access Point

On 10 July 2026, ESMA launched the collection of information from officially appointed mechanisms and NCAs for the first phase of the European Single Access Point (ESAP). This is the first milestone towards the go-live of the ESAP platform, which is required to become publicly accessible by July 2027, and which will provide free, centralised access to financial and sustainability information about entities and their products.

The first phase covers information disclosed under the Transparency Directive, the Prospectus Regulation and the Short Selling Regulation, with further categories of information to be brought within scope in the coming years. Over the next 12 months, ESMA will gather an EU-wide set of information ahead of the platform’s public opening. ESAP is intended to become a single source of issuer and product disclosures across the EU, which over time should support research, due diligence and, in particular, the sourcing of sustainability-related data.

14. EU – Regulatory Q&As

ESMA publishes new Q&As on ESG ratings, cryptoassets and the consolidated tape

On 10 July 2026, ESMA published a batch of new questions and answers across several regimes of potential relevance to asset managers.

• EU ESG Ratings Regulation (ESGRR). ESMA published a series of Q&As addressing, among other things, the treatment of consulting activities to investors or undertakings, the scope and application of the two working-day notification period, access to datasets for factual error review, the obligation to consider issuer feedback, the treatment of ESG ratings used for internal purposes or in-house financial services and the exemption for second-party opinion providers. These are relevant both to firms that produce ESG ratings and to firms that rely on them.
• Markets in Crypto-Assets Regulation (MiCA). ESMA clarified the perimeter of advice under MiCA compared with MiFID II, the treatment of crypto-asset lending services, and the position of an authorised crypto-asset service provider providing custody, administration or transfer services in relation to crypto-assets issued after a public offer.
• MiFIR (secondary markets). ESMA addressed the consolidated tape provider opt-in regime and the timestamping of orders, complementing the authorisation of the equity CTP noted at Item 8 above.

15. EU – CSDR

ESMA calls on firms to finalise preparations ahead of T+1 settlement deadlines

On 20 July 2026, ESMA published a statement highlighting the key deadlines and action points for the EU’s transition to a T+1 settlement cycle from the current T+2 settlement standard for securities transactions, as contemplated by the Central Securities Depositories Regulation (CSDR). With the move scheduled for 11 October 2027, ESMA underlines that 2026 is a critical year for market participants to finalise their preparations, and identifies the first regulatory milestone as 7 December 2026, being the deadline for shifting the allocations and confirmations processes to the new timing and international communication standards.

ESMA encourages market participants not only to prepare and test their own readiness but also to check the readiness of their entire ecosystem across the trading and settlement chain. Firms should confirm that their operating models, counterparty arrangements and outsourced service providers will be ready ahead of the December 2026 milestone.

16. EU – Sanctions

EU adopts 21st package of sanctions against Russia

On 23 July 2026, the Council of the EU adopted, and the European Commission welcomed, the 21st package of sanctions against Russia, described as the largest batch of individual listings since the invasion of Ukraine, adding 48 individuals and 168 entities to the asset-freeze list and targeting the energy, financial services, cryptoasset and military-industrial sectors, together with parallel measures against Belarus.

The measures of most relevance to investment managers firms concern the new financial and cryptoasset restrictive measures. In particular, the package expands the lists of both Russian and third-country banks subject to asset freezes (bringing the total number of Russian banks affected to more than 100), imposes asset freezes on further financial entities and cryptoasset service providers, and prohibits Russian (and Belarusian) nationals sitting on the boards of cryptoasset services businesses from 25 August 2026. The package also introduces wind-down derogations allowing competent authorities to authorise EU, EEA and Swiss persons to withdraw funds and close accounts at newly listed banks and crypto or payment providers in order to terminate those relationships, and strengthens the legal protection of EU operators against the recognition and enforcement of judgements obtained in Russian courts.

Firms should refresh their sanctions screening against the new designations, confirm that no sanctioned Russian or Belarusian nationals control or sit on the boards of any group cryptoasset businesses ahead of the 25 August 2026 deadline, and assess circumvention risk for counterparties in higher-risk third countries. Firms subject to both the UK and EU regimes should note that the divergences between the two regimes continue to widen.

17. EU – Artificial Intelligence

European Commission begins enforcing the AI Act

The European Commission has confirmed that, from 2 August 2026, its AI Office, together with national authorities, began enforcing the EU Artificial Intelligence Act (AI Act), and that new transparency rules started to apply on the same date. To support firms, the Commission adopted guidelines on the transparency obligations, alongside a voluntary Code of Practice on Transparency of AI-Generated Content.

From 2 August 2026, the AI Office’s enforcement powers over providers of general-purpose AI (GPAI) models switched on, the rules on prohibited AI practices became enforceable and the transparency obligations in Article 50 of the AI Act began to apply.

Article 50 requires, among other things, that individuals interacting with an AI system (such as a chatbot or voice assistant) be informed that they are dealing with AI unless this is obvious, and that AI-generated or manipulated content, including deepfakes, be disclosed and marked. Breaches of Article 50 can attract fines of up to €15 million or 3% of worldwide annual turnover, whichever is higher. A limited transitional period runs until 2 December 2026 for the marking and detection obligation for generative AI systems already on the market.

The AI Act applies extraterritorially to providers and deployers whose AI systems are placed on the EU market or whose outputs are used in the EU. Firms that deploy client-facing chatbots or use generative AI to produce content should assess whether the Article 50 transparency obligations apply to them, and firms that fine-tune or substantially modify models may need to consider whether they qualify as GPAI providers in their own right.

18. EU – ESG

EFRAG consults on the ESRS for certain non-EU undertakings

On 23 July 2026, the European Financial Reporting Advisory Group (EFRAG) launched a 100-day public consultation on the exposure draft of the European Sustainability Reporting Standards for certain non-EU undertakings (ESRS-40a), developed as technical advice to the European Commission under Article 40a of the Accounting Directive. The consultation closes on 31 October 2026.

The draft standard would apply to certain third-country undertakings with significant activities in the EU that meet the thresholds set out in Article 40a of the Accounting Directive, and supports the implementation of the Corporate Sustainability Reporting Directive (CSRD). EFRAG describes ESRS-40a as the last component of the CSRD to take effect, intended to ensure a level playing field for EU companies and to provide transparency on the impacts on people and the environment of non-EU undertakings with EU activities. EFRAG expects to deliver its technical advice to the Commission in January 2027, after which the Commission will run its own consultation before adopting a delegated act. The first reports under the future ESRS-40a are expected to cover financial year 2028, with publication in 2029. EFRAG has also indicated that it will publish a cost-benefit analysis in mid-August 2026.

In-scope groups, and firms that rely on such disclosures, are encouraged to respond before the 31 October 2026 deadline.

19. International – ESG

ISSB proposes an update to its digital sustainability disclosure taxonomy

On 29 July 2026, the International Sustainability Standards Board (ISSB) published a proposed update to the IFRS Sustainability Disclosure Taxonomy (Proposed Update 1, Amendments to Greenhouse Gas Emissions Disclosures). The proposal does not introduce new requirements, but rather updates the digital taxonomy to reflect the targeted amendments made to IFRS S2 Climate-related Disclosures in December 2025, which provided reliefs and clarifications in relation to greenhouse gas emissions disclosures.

The ISSB Taxonomy supports digital reporting by enabling companies to tag information prepared under the ISSB Standards so that it is machine-readable and can be searched, extracted and compared by investors. The comment period closes on 28 September 2026. While the update is technical, it is relevant to firms as users of sustainability-related disclosures, and to firms tracking the adoption of the ISSB Standards in the UK (through the UK Sustainability Reporting Standards) and other jurisdictions, given the growing role of ISSB-aligned data in investment analysis and firms’ own reporting.