Key Takeaways
- • The UK's new short selling regime commences on July 13, 2026, introducing a reformed regulatory framework for investment managers operating in UK markets.
- • The Financial Conduct Authority (FCA) has proposed changes to registration requirements for authorised fund assets and published findings from its review of sanctions systems and controls at investment firms.
- • The Financial Services and Markets Bill 2026-27 represents ongoing legislative reform affecting UK investment management, with the FCA's Regulatory Initiatives Grid tracking implementation priorities.
- • Regulatory developments span multiple asset classes and operational areas, including tokenisation, artificial intelligence governance, climate-related disclosures, cryptoassets, and private markets supervision.
- • Both UK and EU regulators are addressing operational resilience, anti-money-laundering frameworks, and non-bank financial intermediation risks, with the European Central Bank and Financial Stability Board publishing vulnerability assessments on private credit markets.
Summary
Macfarlanes' June 2026 investment management update provides a comprehensive overview of regulatory developments affecting UK and EU asset managers. The publication focuses on legislative initiatives, regulatory guidance, and compliance frameworks that investment firms must navigate in the coming months.
On the UK side, the commencement of the new short selling regime on July 13, 2026, represents a significant shift in market structure regulation. Concurrent with this change, the Financial Conduct Authority has advanced its review of sanctions systems and controls at investment firms, with published findings informing compliance expectations. The FCA has also proposed modifications to registration requirements for authorised fund assets, signaling evolving standards for fund structuring and regulatory approval processes. The Financial Services and Markets Bill 2026-27 continues to shape the broader legislative landscape, with the FCA's Regulatory Initiatives Grid serving as the tracking mechanism for implementation timelines.
Emerging regulatory priorities include tokenisation frameworks, artificial intelligence governance within investment operations, climate-related disclosure standards, cryptoasset regimes, and private markets oversight. These areas reflect regulatory focus on financial innovation, operational technology integration, and sustainable finance commitments.
European regulators have similarly advanced guidance under key directives governing asset managers. The European Securities and Markets Authority (ESMA) has issued compliance findings on internal audit and fund management functions under both the Alternative Investment Fund Managers Directive (AIFMD) and UCITS frameworks. ESMA has updated the Markets in Financial Instruments Directive (MiFID II) transparency manual and introduced new research payment provisions, alongside publishing findings on MiFID II sustainability requirements implementation. The European Central Bank and Financial Stability Board have published material assessments of vulnerabilities in non-bank financial intermediation and private credit markets, respectively.
Regulatory attention to anti-money-laundering frameworks, operational resilience standards (DORA), and cryptoasset regulation (MiCA) underscores the shared focus of UK and EU authorities on systemic risk mitigation and financial crime prevention across investment management ecosystems.
On the UK side, the commencement of the new short selling regime on July 13, 2026, represents a significant shift in market structure regulation. Concurrent with this change, the Financial Conduct Authority has advanced its review of sanctions systems and controls at investment firms, with published findings informing compliance expectations. The FCA has also proposed modifications to registration requirements for authorised fund assets, signaling evolving standards for fund structuring and regulatory approval processes. The Financial Services and Markets Bill 2026-27 continues to shape the broader legislative landscape, with the FCA's Regulatory Initiatives Grid serving as the tracking mechanism for implementation timelines.
Emerging regulatory priorities include tokenisation frameworks, artificial intelligence governance within investment operations, climate-related disclosure standards, cryptoasset regimes, and private markets oversight. These areas reflect regulatory focus on financial innovation, operational technology integration, and sustainable finance commitments.
European regulators have similarly advanced guidance under key directives governing asset managers. The European Securities and Markets Authority (ESMA) has issued compliance findings on internal audit and fund management functions under both the Alternative Investment Fund Managers Directive (AIFMD) and UCITS frameworks. ESMA has updated the Markets in Financial Instruments Directive (MiFID II) transparency manual and introduced new research payment provisions, alongside publishing findings on MiFID II sustainability requirements implementation. The European Central Bank and Financial Stability Board have published material assessments of vulnerabilities in non-bank financial intermediation and private credit markets, respectively.
Regulatory attention to anti-money-laundering frameworks, operational resilience standards (DORA), and cryptoasset regulation (MiCA) underscores the shared focus of UK and EU authorities on systemic risk mitigation and financial crime prevention across investment management ecosystems.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.