Financial Services update: March 2026
The Financial Conduct Authority (FCA) has published consultation papers and updates that signal continued regulatory change across asset management, investment firms and cryptoasset activities. This update highlights some of the key developments that financial services firms should be aware of, from fund tokenisation and transaction reporting reform to prudential requirements and regulatory filings.
Progressing fund tokenisation
The UK manages £14.3 trillion in assets under management (AUM) and, as part of plans to retain this status as global asset management hub, the FCA is considering a range of proposals around the tokenisation of funds. They consider that this will become essential to appeal to digital-native investors.
The FCA has proposed a roadmap with next phase use cases being the tokenisation of money market funds for use as collateral, and fully “on-chain” funds using digital cash instruments.
More information can be found in CP25/28 and includes proposals for potential amendments to COLL to accommodate such limited cryptoasset use.
Transaction reporting
The FCA’s Consultation Paper CP25/32 proposes a major overhaul of the UK transaction reporting regime to reduce regulatory burdens, improve data quality and support market integrity. The FCA plans to streamline reporting by reducing the number of data fields, eliminating duplicative requirements and narrowing the scope of reportable instruments. Key changes include:
- removing FX derivatives from MiFIR reporting;
- excluding instruments tradeable only on EU venues;
- reducing backreporting obligations from five to three;
- simplifying obligations for systematic internalisers and trading venues.
Overall, the FCA expects the reforms to reduce annual industry reporting costs by over £100 million and deliver long-term efficiencies for both firms and regulators.
Reduction in late filing fee
There is a proposal for the FCA to reduce late filing of return fees from £250 to £100. Most firms have no issue with submitting their regulatory reports on time and this good performance has triggered the change by the FCA.
IFPR/MIFIDPRU
The FCA released the IFPR Newsletter (September 2025) covering reminders and clarifications on the IFPR regime.
The FCA reminds MiFIDPRU firms of their obligation to notify the regulator promptly of creating or changing an investment firm group. Firms must keep accurate FCA group records and ensure that prepopulated group information in MIF returns matches their current structure.
The newsletter also highlights common misinterpretations among LLP-structured firms regarding Common Equity Tier 1 (CET1) capital, stressing that automatically allocated or withdrawable profits cannot qualify as CET1 unless the partnership retains an unconditional right to refuse distribution.
The newsletter also identifies frequent errors in ICARA and MIF007 submissions, including misreporting of the Own Funds Threshold Requirement (OFTR) and Liquid Assets Threshold Requirement (LATR).
Finally, the FCA warns that up to 10% of MiFID firms may be incorrectly claiming the small companies reporting exemption when submitting accounts to Companies House. As a reminder, under the Companies Act 2006, MiFID investment firms are ineligible to be treated as small, require an annual audit and cannot use the small company accounting regime.
Prudential regime for cryptoasset firms
The FCA’s Consultation Paper CP25/42 sets out a full prudential regime for cryptoasset firms following the 2025 Cryptoasset Regulations.
This expands FCA oversight from promotions and AML into the prudential supervision of firms carrying out a wide range of cryptoasset activities.
The proposed regime applies to activities including trading platforms, staking, custody and dealing or arranging transactions. It introduces a structured framework for capital and liquidity, aligning many features with the existing MiFIDPRU approach while adapting rules to reflect the unique risks of cryptoassets.
The paper proposes detailed own funds and liquidity requirements, with firms required to meet the highest of:
- a permanent minimum requirement;
- a fixed overheads requirement;
- a K factor requirement, with new K factors tailored to crypto markets and client order activity.
This change aims to bring firms undertaking these activities in line with other MiFIDPRU firms, strengthening customer protection and regulation to this asset class.
The FCA’s proposals also update the Client Assets Sourcebook (CASS), including changes to both CASS 7 and CASS 16, to ensure the rules apply appropriately within the UK cryptoasset regulatory regime.
Get in touch with the experts
Taken together, these developments point to a continued emphasis on improving data quality, strengthening prudential resilience and supporting the controlled adoption of digital assets. Firms should consider the operational, reporting and capital implications of these proposals, alongside their longer-term regulatory strategy.
If you would like to discuss how these changes may affect your business, please contact a member of our financial services team.
