UK Wholesale Markets Review

Executive Summary

HM Treasury launched the UK’s Wholesale Markets Review (WMR) in 2021 to determine how the UK should adapt its approach to regulating secondary markets post-Brexit and improve certain rules under the onshored EU Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) that have not delivered their intended benefits.

WMR proposals that were identified by the UK government as a high priority and required legislative amendments were implemented through new primary legislation, the Financial Services and Markets Act 2023 (FSMA 2023). FSMA 2023 made immediate targeted modifications to retained EU law and will apply for a transitional period until the retained MiFIR is replaced with a UK purpose-made alternative. The Government will decide whether, after the end of the transitional period (which is until 2026), EU-derived legislation is to be retained, in whole or in part and with or without modifications, whether it should be retained in the form of stand-alone regulations or via amendments to primary legislation (e.g., as part of FSMA itself) or other subordinate legislation and the extent to which the replacement or modification of all or part of the revoked legislation should be delegated to regulators under existing or new powers or via the new designated activities regime.

WMR proposals identified by the Government as less urgent are also being delivered, at a slower pace, through this process. Some WMR proposals have been delivered without further legislation and by UK regulators under existing rule-making powers. These are being made as soon as the relevant consultation and rule-making process is complete. Other proposals are being made by HM Treasury through secondary legislation or by UK regulators using new powers after relevant provisions of FSMA 2023 are brought into force and the relevant consultation and rule-making process is complete.

In December 2022, a package of 30 reforms, the “Edinburgh Reforms”, were announced by the UK’s Chancellor of the Exchequer. The Edinburgh Reforms put some of the WMR proposals into action, such as bringing forward secondary legislation in Q1 2023 to remove regulatory burdens for firms trading commodity derivatives as an ancillary activity; providing a timeline for the creation of a regulatory regime to support consolidated tapes for market data; and laying a statutory instrument before the UK Parliament to remove burdensome requirements related to investor reporting rules, including a revocation of Article 62 of the UK version of the MiFID Org Regulation (additional reporting obligations for portfolio management or contingent liability transactions) which came into force in mid-January 2023. The Edinburgh Reforms also introduced some new developments, including an independent review of investment research rules, a review of the onshored UK Short Selling Regulation and the establishment of a new industry-led Accelerated Settlement Taskforce to explore the potential of faster settlement of financial trades in the UK.

Please contact Adam Jacobs-Dean or Aniqah Rao with any questions regarding these proposals.

Adam Jacobs-Dean

Managing Director, Global Head of Markets, Governance and Innovation, AIMA
Aniqah Rao

Associate Director, Markets, Governance and Innovation

Practical Implications

The WMR and Edinburgh Reform changes will present the following practical implications:

Updates to reporting processes.
Need to coordinate with sell-side counterparties to understand how changes will impact on execution of strategies and on responsibility for post-trade reporting.
Optional integration of consolidated tape data into trading and operation processes.
Payment optionality for investment research and execution services.
Possible changes to senior management responsibilities, remuneration structures and staff certification.
Possible need for new data collection frameworks within firms.

Timeline

Upcoming Changes

Authority

Rule Change

Effective Date

Categorisation

Resources

Enacted by HMT and the FCA via Secondary Legislation/ Rule-Making powers

FCA

Establishment of a simpler and more timely post-trade transparency regime for bonds and derivatives that is based on fewer deferrals for bonds and certain OTC derivatives e.g. three deferral durations for bonds; amended length and threshold size for an order to qualify for the deferrals; refined grouping criteria for bonds; longer deferrals for swaps with non-benchmark tenors and lowered threshold sizes for SONIA swaps; removal of systems relying on negotiation from the scope of pre-trade transparency; firms to report the UPI only where one exists, otherwise an ISIN)
Transparency requirements are specified only for bonds admitted to trading on a trading venue and certain derivatives subject to the clearing obligation.
OTC trading of non-specified instruments by investment firms will not be subject to public trade reporting.
Standards and criteris set for trading venues when calibrating their transaprency requirements
Removal of requirement to perform transparency calculations which had been used to determine whether an instrument was liquid. The FCA will now rely on a set of reliable proxies to determine whethet an instrument should be categorised as liquid.
Discontinuation of the Financial Instruments Transparency System (FITRS) for bonds and derivatives (the new regime does not depend on rigis liquidity calculations based on fixed parameters)
Definition of an SI is updated from a quantitiative to a qualitative definition (exisiting SIs do not need to notify the FCA of their SI status under the new definition)

1 December 2025

High Priority

High Impact

FCA consultation

AIMA response

FCA policy statement

Changes Pending Finalisation

Authority	Rule Change	Effective Date	Categorisation	Resources
*Enacted by HMT and the FCA via Secondary Legislation/ Rule-Making powers*
FCA	Amend COBS 18 Annex 1 rules and other related rules to allow collective portfolio managers to purchase investment research with joint payments for third-party research and execution services, subject to certain requirements (in line with recent rules introduced to COBS 2.3 for pooled funds) Add short-term trading commentary, which does not contain substantive analysis and bespoke trade advisory services, to the list of acceptable non-monetary benefits Delete the existing rule on research for smaller companies from the list of acceptable minor non-monetary benefits (while retaining the rule that corporate access service for smaller companies is an acceptable MNMB)	H1 2025 Policy statement with rules/ guidance to be published in H1 2025.	Medium Priority Medium Impact	FCA consultation paper (closed 16 December 2024)
FCA	Change the pre-trade transparency regime for SIs Improve the identification of technical trades Removal of restriction on operators of MTFs from undertaking matched principal trades on their own venue	By 1 December 2025 Consultation paper to be published in Q2 2025, following responses to the FCA's discussion paper	Low Priority Low Impact	FCA discussion paper on the future of the SI regime (closed 10 January 2025)
FCA	Improve the operational aspects of the UK’s Senior Managers and Certification Regime.	No earlier than 2026 – awaiting second FCA consultation with proposals. On 14 November 2024, the Chancellor of the Exchequer outlined a number of key policy initiatives for the UK financial services sector. The Chancellor stated that HM Treasury, the FCA and PRA would shortly publish the results of the SMCR Review and consult on changes including replacing the current Certification Regime with a more proportionate approach that reduces costs for financial services firms.	Medium Priority Medium Impact	FCA Review of the SMCR AIMA response
HMT	Improve the legislative aspects of the UK’s Senior Managers and Certification Regime.	No earlier than 2026 – awaiting proposals.	Medium Priority Medium Impact	FCA SMCR Review AIMA response
FCA	Development of a UK consolidated tape for bonds	2026 - awaiting selection and authorisation of bonds CTP The Data Reporting Services (Amendment) Instrument 2023 came into force on 5 April 2024 with amendments to the FCA's Handbook, the Enforcement Guide and the MiFID II Onshoring Guide reflecting the finalised UK bonds CT framework. The FCA worked with consultants from DotEcon Ltd to finalise the tender design to appoint a bonds CTP and will commence the tender in March 2025. The tape will be operational after the changes to the transparency regime for non-equities take effect in December 2025.	Medium Priority Medium Impact	FCA consultation on the framework for a UK consolidated tape (CP23/15) AIMA summary (CP23/15) AIMA response (CP23/15) FCA consultation on payments to data providers and DRSP forms & Policy Statement for the framework for a UK consolidated tape & (made) Data Reporting Services (Amendment) Instrument 2023 (CP23/33) AIMA summary (CP23/33) FCA feedback to CP23/33 - Handbook Notice 117
FCA	Replace the current public disclosure regime with an aggregated net short position disclosure regime; Require the FCA to publish a 'positive' list of in-scope shares; and Grant the FCA powers to intervene in exceptional cicrumstances Note: The Financial Conduct Authority will consult in Q3 2025 on: Rules about the net short position reporting regime; Rules on the functioning of public disclosure Rules on arrangements for overseas shares; and Its approach to using its retained emergency intervention powers The FCA plans to publish final rules in Q2 2026.	No earlier than Q2 2026 - awaiting consultation on draft rule proposals. The changes to the short selling rules that have been set out in the Short Selling Regulations 2025, which took effect on 14 January 2025, will be enacted via FCA final rules. The FCA plans to consult on its draft rules in Q3 2025, with a view to publishing its final rules in Q2 2026. The changes will take effect on a date specified in its final rules.	High Priority High Impact	HMT Short Selling Regulation Review AIMA response HMT response The Short Selling Regulations 2024 (Draft SI) The Short Selling Regulations 2025 (Made)
FCA	Remove restrictions on uncovered short positions in UK sovereign debt; Remove restrictions on uncovered short positions in UK sovereign CDS; Remove requirements to report sovereign debt positions to the FCA; Remove requirements to report sovereign CDS positions to the FCA; and Extend FCA emergency powers applicable to equities to sovereign debt and CDS.	No earlier than Q2 2026 - awaiting consultation on draft rule proposals. The changes to the short selling rules that have been set out in the Short Selling Regulations 2025, which took effect on 14 January 2025, will be enacted via FCA final rules. The FCA plans to consult on its draft rules in Q3 2025, with a view to publishing its final rules in Q2 2026. The changes will take effect on a date specified in its final rules.	Medium Priority Medium Impact	HMT Short Selling Regulation Review: Sovereign Debt and Credit Default Swaps AIMA response HMT response The Short Selling Regulations 2024 (Draft SI) The Short Selling Regulations 2025 (Made)
FCA	Improvements to UK MiFIR transaction reporting regime	No earlier than January 2027 - awaiting consultation on rule proposals. Summer 2025: Expected publication of consultation paper Q1 2026: Expected publication of Policy Statement with final rules. Q3 2027: Expected date of effect (12 - 18 month implementation period expected)	High Priority Medium Impact	FCA discussion paper on improving the UK's transaction reporting regime AIMA summary AIMA response to FCA discussion paper
FCA	Development of a UK consolidated tape for shares and ETFs	No earlier than January 2028 (AIMA estimate) - awaiting consultation on design proposals and selection and authorisation of equities CTP In August 2024, the FCA appointed consultants from Europe Economics to undertake analysis, on an independent basis, of the impact of the inclusion of pre-trade data on the stability and resilience of UK equity markets and the outcomes for different users of the market. On 17 December 2024, the FCA published Europe Economic's final report alongside an update regarding the FCA's work. In Q1 2025, the FCA engaged on potential design options through industry roundtables and a survey of market participants. The FCA will work towards publishing a consultation paper later in the year with proposals for a CT for equities.	Medium Priority Medium Impact	FCA terms of reference for the study on a pre-trade CT for equities

Past Changes

Authority	Rule Change	Effective Date	Categorisation	Resources
*Enacted by HMT via FSMA 2023*
HMT	Removal of Share Trading Obligation	29 August 2023	High Priority High Impact	HMT Wholesale Markets Review AIMA summary of WMR consultation AIMA response to WMR consultation HMT Response AIMA summary of HMT response. AIMA summary of WMR state of play (as of November 2022).
HMT	Replacement of the pre-trade transparency waiver regime and removal of the double-volume cap mechanism	29 August 2023	High Priority High Impact
HMT	New definition of Systematic Internaliser (which removes the need for firms to undertake complex quantitative calculations to determine if they are operating on an organised, frequent, systematic and substantial basis).	29 August 2023	Low Priority Low Impact
HMT	Removal of restrictions on midpoint crossing for trades (SIs will be able to execute client orders at the midpoint within the best bid and offer for all trades, not just orders Large in Scale.)	29 August 2023	Medium Priority Medium Impact
HMT	Alignment of the counterparty scope of the Derivatives Trading Obligation with the EMIR Derivatives Clearing Obligation	29 August 2023	Low Priority Low Impact
HMT	Exemption of post-trade risk reduction services from the Derivatives Trading Obligation	29 August 2023	Low Priority Low Impact
HMT	Revocation of the requirement for position limits to be applied to all exchange-traded contracts and removal of economically equivalent OTC (EEOTC) contracts from the scope of the commodity derivatives position limits regime.	29 August 2023	Low Priority Low Impact
*Enacted by HMT and the FCA via Secondary Legislation/ Rule-Making powers*
HMT	Revocation of the ancillary activities test, reintroduction of the pre-MiFID II ‘commodity dealer exemption’ and removal of the annual notification requirement via The Financial Services and Markets Act 2000 (Commodity Derivatives and Emission Allowances) Order 2023	1 January 2025	Low Priority Medium Impact	HMT Wholesale Markets Review AIMA summary of WMR consultation AIMA response to WMR consultation HMT Response AIMA summary of HMT response. AIMA summary of WMR state of play (as of November 2022).
HMT; FCA	Enable firms such as asset managers who wish to buy investment research to use joint payments for third-party research and execution services, provided that the firm meets the requirements in relation to the operation of these; and Add short-term trading commentary and advice linked to trade execution to the list of acceptable minor non-monetary benefits (MNMBs) in the Conduct of Business sourcebook (COBS); and Delete the option for combined payments for research and trade execution to purchase research on companies with a market capitalisation below £200 million from the list of acceptable MNMBs in COBS.	1 August 2024	High Priority High Impact	HMT Investment Research Review AIMA response to Investment Research Review Chair of Review Report FCA consultation (CP24/7) AIMA response to FCA consultation FCA Policy Statement
FCA	Introduction of a ‘Designated Reporter Regime’	29 April 2024	High Priority High Impact	FCA Improving Equity Secondary Markets AIMA response to consultation FCA Policy Statement
FCA	New requirements relating to post-trade transparency (changes to inter fund transfers; give-ups and give-ins; inter-affiliate trades; central counterparties; deferrals; trade reports; and reporting fields)	29 April 2024	Medium Priority Medium Impact	FCA Improving Equity Secondary Markets AIMA response to consultation FCA Policy Statement
HMT; FCA	Increase the notification threshold for net short position reporting to the FCA from 0.1% to 0.2%.	5 February 2024	High Priority High Impact	HMT Short Selling Regulation Review AIMA response HMT response HMT Statutory Instrument - The Short Selling (Notification Threshold) Regulations 2023
FCA	Changes to waivers from pre-trade transparency (the reference price waiver and the order management facility waiver)	1 May 2023	Low Priority Medium Impact	FCA Improving Equity Secondary Markets AIMA response to consultation FCA Policy Statement
FCA	Changes to the tick size regime – allowing trading venues to adopt the minimum tick size of the primary market located overseas when that tick size is smaller than the one determined based on calculations using data from UK venues.	1 May 2023	Low Priority Medium Impact	FCA Improving Equity Secondary Markets AIMA response to consultation FCA Policy Statement
FCA	Exemption from inducement rules of research on SMEs who have a market capitalisation below GBP 200m from the inducement rules; Extension of the SME exemption to cover SME “corporate access”; Exemption of third-party research that is received by a firm providing investment services or ancillary services to clients where it relates to FICC instruments; Exemption of research providers who do not provide execution services and are not part of a group that includes a firm offering execution services; and Clarification that openly available written research will not fall within the scope of the inducement rules.	1 March 2022	Low Priority Low Impact	FCA Changes to UK MiFID Conduct and Organisational Requirements AIMA response to consultation FCA Policy Statement
FCA	Removal of the UK versions of RTS 27 and RTS 28 and removal of references to these reporting obligations in the FCA Handbook.	1 December 2021	High Priority High Impact	FCA Changes to UK MiFID Conduct and Organisational Requirements AIMA response to consultation FCA Policy Statement
FCA	Wholesale Market Data No rule changes. Overall, the FCA did not find evidence that firms cannot access the wholesale data they need. Across the three markets in scope of the FCA's study (benchmarks, credit ratings data and market data vendor services) the FCA identified evidence of, and drivers for, market power. The FCA notes that users may be paying higher prices for the data they buy than if competition was working more effectively. The FCA will not be making a market investigation reference to the Competition and Markets Authority. The FCA will focus next steps on (i) looking at where the issues identified could be addressed through the Smarter Regulatory Framework; (ii) and tackling firm specific issues using other tools such as the FCA's powers under the Competition Act 1998. The FCA notes that its scope to make changes to existing regulatory requirements may be increased as HM Treasury reviews the regulations relevant for wholesale data markets. The FCA will use the findings of its market study to inform potential changes to these regulations.	No changes	Medium Priority Medium Impact	FCA Wholesale Data Market Study Terms of Reference FCA Trade Data Review Findings Report AIMA response FCA provisional market investigation reference decision FCA progress report FCA final decision and report

Open/ Upcoming Consultations

Authority	Topic	Timeline
FCA	Consultation on the MiFID Organisational Regulation (re: transfer of firm-facing requirements to FCA Handbook) AIMA summary	Published on 27 November 2024. Closes 28 February 2025.
FCA	Discussion chapter on the MiFID Organisational Regulation (re: future reform) AIMA summary	Published on 27 November 2024. Closes 28 March 2025.
FCA	Consultation on changes to the UK's commodity derivatives regulatory framework	Q2 2025 publication (due December 2024)
FCA	Consultation on changes to the Certification Regime	Q2 2025 publication (due December 2024)
FCA	Consultation paper on margin requirements for non-centrally cleared OTC Derivatives	Q2 2025 publication
FCA	Consultation paper on the future of the Systematic Internaliser regime	Q2 2025 publication
FCA	Consultation paper on MiFID II transaction reporting requirements	Summer 2025 publication
FCA	Consultation on changes to UK Short Selling Regulation	Q3 2025 publication
FCA	Consultation on the framework for an equities consolidated tape	Late 2025 publication