Overview

The Financial Conduct Authority (FCA) has published its 2026 Regulatory Priorities for wholesale markets and wholesale buy side. These reports replace more than 40 portfolio letters and are intended to give firms a clearer and more focused view of supervisory expectations. They should be read as a forward-looking articulation of regulatory expectations, rather than a statement of new rules.

The FCA describes the reports as “a clear, succinct one-stop shop” that “should act as a guide for firms’ boards and chief executives”. The underlying supervisory philosophy is one of proportionality: “less intensive attention on firms doing the right thing, and stronger, faster action where harm is greatest”.

Wholesale markets: key regulatory priorities

The key regulatory priorities for wholesale markets are applicable to, among others, principal trading firms, trade repositories, trading venues, wholesale banks, and wholesale brokers.

1.    Improve the resilience of firms and markets

The FCA expects firms to demonstrate that they can withstand stressed conditions. Focus areas include:

• Operational resilience, including third-party dependencies and cyber resilience
• Liquidity management and financial resilience
• Robust trading systems and controls

Firms should expect the FCA to test whether frameworks are practical and effective, not just documented.

2.    Enhance efficient, competitive, and innovative markets

The FCA continues to advance its wholesale markets reform agenda, including:

• Listing regime reform
• Consolidated tape development
• Transition to T+1 settlement
• Securitisation framework changes

The objective is to improve market efficiency while maintaining standards.

3.    Enable the safe and responsible adoption of new technology

Firms adopting new technologies should expect scrutiny of their governance, testing, and controls. Focus areas include:

• Algorithmic trading controls
• Use of AI in decision-making
• Deployment of distributed ledger technology

The FCA’s position is clear: innovation is supported, but governance must be commensurate with risk.

4.    Prevent financial crime and market abuse

The FCA maintains a strong focus on combating financial crime and market abuse. Key areas include:

• Market abuse surveillance
• Transaction reporting and data quality
• Strengthening financial crime controls

Deficiencies in surveillance systems and data remain a recurring supervisory concern. The FCA has identified gaps in some firms’ market abuse surveillance, including incomplete or inaccurate data feeds, ineffective alert calibration, and weak testing and governance of surveillance models.

5.    Ensure firms effectively manage conflicts of interest and conduct oversight

Firms must ensure:

• Conflicts of interest are properly identified and managed.
• Conduct risks are identified early, escalated, and addressed to prevent harm, with clear accountability and assurance.

This is particularly relevant for firms with complex or multi-service business models.

Wholesale buy-side: key regulatory priorities

The key regulatory priorities for wholesale buy-side are applicable to asset managers, alternative asset managers, and custody and fund services providers.

1.    Evolve regulation to foster growth and innovation and serve changing consumer needs

The FCA is seeking to enhance the UK’s competitiveness in asset management. Key workstreams include:

• Consultations on a proportionate regulatory regime for alternative investment fund managers planned for Q3 2026
• Fund tokenisation policy statement expected in Q2 2026
• Transformation of the regulatory data model for asset managers and funds to make reporting more proportionate and incorporate global data standards

Firms pursuing innovation should ensure clear governance and investor protection. The FCA encourages firms to experiment using its sandbox services, including the Digital Securities Sandbox.

2.    Reinforce consistent, high standards across private market investing

Private markets are a central focus area. The FCA is concerned with:

• Valuation practices for illiquid assets
• Conflicts of interest
• Transparency to investors

The FCA will also support the Bank of England as it conducts a new private markets system-wide exploratory scenario.

3.    Preserve market integrity and resilience to disruption

Buy-side firms are expected to strengthen their resilience and risk management. The FCA expects firms to:

• Strengthen operational resilience
• Strengthen governance frameworks
• Ensure strong systems and controls are in place to detect and prevent market abuse

The FCA is particularly focused on the alignment between asset liquidity and redemption terms. Firms should assess concentration risks within their own portfolios, as well as those arising from counterparties.

4.    Deliver good outcomes to consumers

The FCA expects firms to embed the Consumer Duty for retail business and take an outcomes-based approach. Key areas include:

• A multi-firm review of model portfolio services (MPS), assessing whether investors in MPS are receiving good outcomes, with findings expected in Q1 2027
• Continued focus on outlier firms that design products and services that do not consider consumers’ best interests
• Engagement with firms developing retail private markets and retirement income products

Importantly, the FCA has listened to feedback about the application of the Consumer Duty for firms engaged in wholesale activity and plans to review and potentially amend the Duty’s rules to remove disproportionate burdens from wholesale firms.

Practical implications

Firms should prioritise:

• Gap analysis against FCA priorities
• Review of valuation frameworks, particularly for private assets
• Assessment of conflicts of interest management
• Testing of surveillance and control systems
• Review of governance and accountability structures

In particular, firms should be prepared to demonstrate that their frameworks are operating effectively in practice, not simply that they exist.

Conclusion

The FCA’s 2026 priorities reinforce a consistent message: supervisory focus is shifting away from detailed rule compliance towards outcomes, governance, and real-world effectiveness.

For wholesale firms, this means increased scrutiny of how decisions are made, how risks are managed, and whether client and market outcomes are appropriate. Firms that can clearly evidence these elements will be better placed to navigate supervisory engagement in the year ahead.

Client Alert 2026-075