FCA outlines Regulatory Priorities for Wholesale Markets, and announces new initiatives

On 19 March 2026, the Financial Conduct Authority (“FCA”) published its Regulatory Priorities report for Wholesale Markets. As part of a broader project, the FCA has replaced its portfolio letters with new Regulatory Priority reports, which will be published annually and will set out the FCA’s areas of focus by industry sector. 

A separate report sets out the FCA’s specific additional priorities for wholesale buy-side firms, which covers asset managers, custody banks and fund services providers (you can read our client note on that report here). 

Of particular note in this report is the FCA’s repeated statement of its expectations that firms “engage proactively” with the various ongoing reforms and “engage with regulatory sandboxes and industry initiatives” to enable the safe and responsible adoption of new technologies. We set out a summary of the priorities below, providing our comments on those initiatives which are new or particularly noteworthy.

Understanding the FCA’s priorities and the implications for affected firms

The FCA has identified five key priority areas for firms operating in the wholesale markets: 

• Improve the resilience of firms and markets.
  • Following 170 self-reported operational incidents in 2025, the FCA expects firms to raise operational resilience standards, ensure trading controls are robust and bolster liquidity management. The FCA will carry out various initiatives to review and assess firms’ cyber and operational resilience in the year ahead, including oversight of third party risks, which were the root cause of operational incidents in 26% of self-reported cases. 
  • The FCA confirms that it will consult on rules and guidance to strengthen the resilience of markets following outages in 2026, building upon the recent work that has been done at the level of the International Organization of Securities Commissions (“IOSCO”), including its 2024 final report on Market Outages.   
  • Firms will have noted the European Securities and Markets Authority’s (“ESMA”) recent in-depth report on algorithmic trading (you can review our client note and our thoughts on the implications of ESMA’s approach here). In this context, the FCA notes (at a comparatively high level) that it will continue to monitor the use of algorithms, including in the context of increased reliance on automated trade execution and investment decision making. 
• Enhance efficient, competitive and innovative markets.
  • The FCA has taken the opportunity to reiterate the various reforms that have been completed or which are currently underway to rewrite the UK’s post-Brexit rulebook in key areas, including the new prospectus and public offers regime, various wholesale market data reforms including in relation to the consolidated tapes for bonds and equities, research payment rules and client categorisation reforms. The FCA has highlighted the various outstanding items that firms can expect this year, including rules for reforming the UK’s securitisation framework and implementation of the new commodity derivatives regulatory framework in July 2026. 
  • New noteworthy items include mention of a review of wholesale conduct rules for potential improvements to support UK growth, and the plan to begin a post-implementation review of the Investment Firms Prudential Regime (“IFPR”) to check the regime remains fit for purpose and to consider how to align the prudential rules for investment firms with the new COREPRU framework. As discussed in CP25/15 as part of the ongoing consultation process for the new cryptoasset regime, it is intended that COREPRU will act as an integrated prudential sourcebook for a range of types of regulated firms (including cryptoasset firms and, in due course, investment firms), with additional sectoral specific requirements being set out in complementary sourcebooks.
  • Another point of interest is a commitment to engage with stakeholders on tokenised securities, an area of increasing interest in the market as traditional finance firms consider how they will be impacted by the new cryptoassets regime and the potential opportunities and efficiencies to be gained from adopting new technologies and settlement modalities.
• Enable the safe and responsible adoption of new technology.
  • The FCA states that it is prioritising the safe and responsible adoption of new technologies across UK wholesale markets, including AI, digital assets and quantum computing. 
  • The FCA expects firms to understand the risks and opportunities from new technologies, ensuring governance, testing and controls evolve to support safe innovation. But, what is particularly interesting, is the FCA’s stated expectation that firms “engage with regulatory sandboxes and industry initiatives”.  
  • The FCA notes that it has seen firms taking a “measured approach” to adopting AI and quantum computing, with thorough testing, cautious deployment and clear oversight. The FCA will continue its engagement with firms across the market this year to understand their use of AI and how they are developing their governance, testing, oversight and management of risks (including third party providers). There is no mention of the development of any formal guidance to facilitate AI adoption.
• Prevent financial crime and market abuse.
  • Tackling financial crime and market abuse are perennial FCA priorities. Of interest, the FCA reports that in 2025 it received 3,806 STORs, with 82% of those being attributed as insider dealing. 
  • The FCA notes that, while it has seen improvements in market abuse monitoring and anti-money laundering compliance, there are gaps, pointing to the outcomes of recent surveys and multi-firm reviews which have highlighted areas for improvement. 
  • The FCA expects firms to strengthen surveillance, data quality, governance and controls to identify, prevent and report financial crime and market abuse risks. In this respect, firms may consider whether new technologies (for example, AI tools) offer opportunities for firms to improve their surveillance functions and to respond to evolving threats. 
• Ensure firms effectively manage conflicts of interest and conduct oversight. 
  • The FCA expects firms to identify and manage conflicts of interest and maintain strong conduct oversight to support trust and market integrity. There is an emphasis on the need to (re)consider conflicts of interest (and adapt/update existing approaches) when adopting additional responsibilities, new regimes and/or new technologies. 
  • Of note, the FCA has announced that it intends to launch a “broad supervisory strategy” to address and mitigate conflicts and “inadequate conduct” in trading and originating activities of wholesale banks in securities markets. This will include multi-firm reviews of market soundings, prime services, executing in emerging markets, allocation of primary market fixed income products and quantitative investment strategies.
  • There are various specific initiatives which are likely to be of interest to wholesale banks and investment firms, including:
    • a governance review at benchmark administrators in H1 2026, including conflicts of interest and conduct oversight. This is in parallel to HM Treasury’s ongoing consultation into the future regulatory regime for benchmarks and UK benchmark administrators, which would see the scope of the regime significantly narrowed;
    • a review and testing of controls in place at wholesale brokers to prevent and investigate non-financial misconduct. In Q3 2026, the FCA will review wholesale brokers’ monitoring of overseas branches and subsidiaries; 
    • a review of the FCA’s (by now long-settled) position on payment for order flow (“PFOF”); 
    • a review of the FCA’s rules following IOSCO’s recent recommendations on pre-hedging (see our client note on IOSCO’s final proposals and the changes that were made through the consultation process here); and
    • finally, a consultation on the application of the Consumer Duty to firms primarily engaged in wholesale activity in H1 2026 (long running engagement between the FCA and industry suggests that a more proportionate approach will be taken in the future).

Next steps for firms

Analyse the impact of the report for your firm and share it with the board and relevant stakeholders. The FCA expects firms to use the report as a guide for their boards and chief executives, reviewing the priorities within them carefully and taking concrete steps where needed. Firms should consider the report in detail and pull out any review actions and follow-ups. 

Consider taking prophylactic steps in relation to areas that will be subject to review.  Firms may wish to pre-emptively consider their policies and procedures in the areas mentioned by the FCA as being subject to future reviews, in order to put themselves in the best position to respond to any incoming queries from the FCA and to take the opportunity to check for any weaknesses that might need addressing, in line with the FCA’s expectations. Part of this may be undertaking thematic reviews of systems and controls and/or refresher training.

Provide feedback to the FCA on the report. The FCA wants to hear from firms as to whether the new approach is helpful and whether any improvements could be made. 

How can we help?

We would be delighted to discuss the report and to help you understand its potential impact on your firm. If it would be helpful to receive refresher training in any of these areas, please let us know.