Key Takeaways
- • ESMA publishes final liquidity management guidelines (12 March 2026): Managers of UCITS and open-ended AIFs must select at least two liquidity management tools from a harmonized list, with full compliance required by 16 April 2027 for existing funds; managers retain primary responsibility for liquidity risk management and may select additional tools beyond the minimum two required.
- • AIFMD II implementation creates immediate market access barrier for BVI funds (16 April 2026): The British Virgin Islands was added to the EU's high-risk third country list under AML legislation on 29 January 2026, rendering BVI-domiciled managers and funds ineligible to market under Article 42 of the AIFMD in EU member states that have transposed the AIFMD II; existing BVI fund managers must address compliance implications immediately.
- • CJEU clarifies insider trading liability for communications regarding insider lists (19 March 2026): Communications indicating that a person has been placed on an insider list can constitute inside information under EU MAR even if reasons are unclear, and information remains inside information if credible at the time of communication despite later proving incorrect; ruling applies equally to UK Market Abuse Regulation.
- • FCA establishes 2026 wholesale buy side priorities focusing on governance, Consumer Duty, and operational resilience (19 March 2026): New sector reports replace "Dear CEO" letters and set supervisory expectations for AI/emerging technology governance, private markets valuations and conflicts management, and strengthened operational resilience; FCA will pursue data-led identification of outlier firms with high leverage, illiquidity, or concentrated strategies.
- • UK short selling regime overhaul extends reporting deadline and removes public disclosure threshold (effective 13 July 2026): Reporting deadline extends from 3:30 pm to 11:59 pm UK time on T+1; private net short position disclosure threshold remains at 0.2%, but public disclosure at 0.5% is removed and replaced with FCA-published aggregated data; firms subject to both EU and UK regimes must manage two distinct compliance frameworks.
Summary
The March–April 2026 regulatory period brought substantial structural changes to asset management regulation across the EU and UK, with particular implications for fund managers' operational frameworks, market access, and trading compliance.
On 12 March 2026, the European Securities and Markets Authority published final guidelines on liquidity management tools for UCITS and open-ended AIF managers, completing the three-layer EU harmonization framework that includes recent directive amendments and regulatory technical standards published on 27 February 2026. The guidelines clarify that managers must select at least two tools from a harmonized list but may deploy additional liquidity measures beyond this minimum. Primary responsibility for liquidity risk management remains with fund managers. Existing funds benefit from a 12-month transitional period, with full compliance under RTS and guidelines required by 16 April 2027, though the minimum two-tool selection requirement took effect on 16 April 2026 for all funds.
The same 16 April 2026 date marked implementation of AIFMD II across EU member states that completed national transposition. A critical but less heralded amendment involves revised Article 42 conditions for non-EU fund managers and funds seeking to market to EU investors. The amendment introduced four stringent jurisdictional preconditions: appropriate cooperation arrangements for systemic risk oversight; exclusion from high-risk AML jurisdictions; compliance with OECD Model Tax Convention standards; and exclusion from the EU non-cooperative tax jurisdictions list. The designation of the British Virgin Islands as a high-risk jurisdiction under EU AML legislation on 29 January 2026 immediately disqualified BVI-domiciled managers and funds from Article 42 marketing in transposed member states, forcing existing BVI fund managers to assess remedial action.
On 19 March 2026, the Court of Justice of the European Union issued a preliminary ruling on inside information scope under EU MAR. The ruling established that communications from an issuer indicating that a person has been placed on the insider list can constitute inside information of a precise nature if a reasonable investor would likely rely on such communication for investment decisions. Critically, the ruling confirmed that information remains inside information even if later shown to be incorrect, provided it was credible at the time of communication and capable of conferring economic advantage. Given UK MAR's identical inside information definition, the judgment carries direct relevance for UK compliance frameworks.
The FCA's 19 March 2026 Regulatory Priorities report for the wholesale buy side sector replaced traditional "Dear CEO" letters with a comprehensive sector guidance document. The FCA identified five priority areas: evolving regulation to foster innovation and emerging technology governance (AI, DLT) with clear accountability and risk management frameworks; delivering consumer outcomes through Consumer Duty embedding and robust product design scrutiny, with specific focus on model portfolio services and retail private markets; reinforcing private markets standards through valuation governance, conflicts management, and alignment of product development frameworks; preserving market integrity via operational resilience, third-party risk management, and governance frameworks for investment models employing leverage or concentration; and data-led identification of outlier firms with elevated leverage, illiquidity, or concentrated strategies.
The UK Consumer Composite Investments regime commenced on 6 April 2026, running parallel with existing PRIIPs and UCITS disclosure regimes until 8 June 2027. The new framework provides greater flexibility than prescriptive legacy regimes while maintaining standardized minimum requirements for cost, risk/return, and performance disclosure to enable retail investor comparison. The statutory definition encompasses investments where payout values fluctuate through exposure to reference values or asset performance not directly purchased by investors, including fund interests, structured deposits, and structured products. The regime applies to manufacturers and distributors of CCIs directed at UK retail investors, including overseas firms; certain products including vanilla corporate bonds, pension products, and pure protection insurance are explicitly excluded.
On 16 April 2026, the FCA published final rules for the new UK short selling regime, effective 13 July 2026. The regime extends the T+1 reporting deadline from 3:30 pm to 11:59 pm UK time—an eight-and-a-half-hour extension accommodating U.S. business hours—while retaining the 0.2% private net short position disclosure threshold. The regime eliminates the previous 0.5% public disclosure threshold, replacing it with FCA-published aggregated position data protecting individual short seller identification. UK sovereign credit default swaps fall outside position reporting scope. A new reportable shares list replaces the exempt shares list. Firms may submit multiple positions through single bulk submissions beginning 30 November 2026. Critically, the EU Short Selling Regulation remains unchanged, requiring firms subject to both regimes to manage divergent EU and UK compliance frameworks.
On 15 April 2026, the FCA published a consultation on cryptoasset perimeter guidance, with final guidance expected in September 2026. The consultation addresses scope clarification for regulated cryptoasset activities under regulations commencing 25 October 2027, including when activities are conducted "by way of business" and "in the UK," required authorizations per regulated activity, and available exclusions. Firms may apply for authorization from 30 September 2026 through 28 February 2027, ahead of the regime commencement date.
On 12 March 2026, the European Securities and Markets Authority published final guidelines on liquidity management tools for UCITS and open-ended AIF managers, completing the three-layer EU harmonization framework that includes recent directive amendments and regulatory technical standards published on 27 February 2026. The guidelines clarify that managers must select at least two tools from a harmonized list but may deploy additional liquidity measures beyond this minimum. Primary responsibility for liquidity risk management remains with fund managers. Existing funds benefit from a 12-month transitional period, with full compliance under RTS and guidelines required by 16 April 2027, though the minimum two-tool selection requirement took effect on 16 April 2026 for all funds.
The same 16 April 2026 date marked implementation of AIFMD II across EU member states that completed national transposition. A critical but less heralded amendment involves revised Article 42 conditions for non-EU fund managers and funds seeking to market to EU investors. The amendment introduced four stringent jurisdictional preconditions: appropriate cooperation arrangements for systemic risk oversight; exclusion from high-risk AML jurisdictions; compliance with OECD Model Tax Convention standards; and exclusion from the EU non-cooperative tax jurisdictions list. The designation of the British Virgin Islands as a high-risk jurisdiction under EU AML legislation on 29 January 2026 immediately disqualified BVI-domiciled managers and funds from Article 42 marketing in transposed member states, forcing existing BVI fund managers to assess remedial action.
On 19 March 2026, the Court of Justice of the European Union issued a preliminary ruling on inside information scope under EU MAR. The ruling established that communications from an issuer indicating that a person has been placed on the insider list can constitute inside information of a precise nature if a reasonable investor would likely rely on such communication for investment decisions. Critically, the ruling confirmed that information remains inside information even if later shown to be incorrect, provided it was credible at the time of communication and capable of conferring economic advantage. Given UK MAR's identical inside information definition, the judgment carries direct relevance for UK compliance frameworks.
The FCA's 19 March 2026 Regulatory Priorities report for the wholesale buy side sector replaced traditional "Dear CEO" letters with a comprehensive sector guidance document. The FCA identified five priority areas: evolving regulation to foster innovation and emerging technology governance (AI, DLT) with clear accountability and risk management frameworks; delivering consumer outcomes through Consumer Duty embedding and robust product design scrutiny, with specific focus on model portfolio services and retail private markets; reinforcing private markets standards through valuation governance, conflicts management, and alignment of product development frameworks; preserving market integrity via operational resilience, third-party risk management, and governance frameworks for investment models employing leverage or concentration; and data-led identification of outlier firms with elevated leverage, illiquidity, or concentrated strategies.
The UK Consumer Composite Investments regime commenced on 6 April 2026, running parallel with existing PRIIPs and UCITS disclosure regimes until 8 June 2027. The new framework provides greater flexibility than prescriptive legacy regimes while maintaining standardized minimum requirements for cost, risk/return, and performance disclosure to enable retail investor comparison. The statutory definition encompasses investments where payout values fluctuate through exposure to reference values or asset performance not directly purchased by investors, including fund interests, structured deposits, and structured products. The regime applies to manufacturers and distributors of CCIs directed at UK retail investors, including overseas firms; certain products including vanilla corporate bonds, pension products, and pure protection insurance are explicitly excluded.
On 16 April 2026, the FCA published final rules for the new UK short selling regime, effective 13 July 2026. The regime extends the T+1 reporting deadline from 3:30 pm to 11:59 pm UK time—an eight-and-a-half-hour extension accommodating U.S. business hours—while retaining the 0.2% private net short position disclosure threshold. The regime eliminates the previous 0.5% public disclosure threshold, replacing it with FCA-published aggregated position data protecting individual short seller identification. UK sovereign credit default swaps fall outside position reporting scope. A new reportable shares list replaces the exempt shares list. Firms may submit multiple positions through single bulk submissions beginning 30 November 2026. Critically, the EU Short Selling Regulation remains unchanged, requiring firms subject to both regimes to manage divergent EU and UK compliance frameworks.
On 15 April 2026, the FCA published a consultation on cryptoasset perimeter guidance, with final guidance expected in September 2026. The consultation addresses scope clarification for regulated cryptoasset activities under regulations commencing 25 October 2027, including when activities are conducted "by way of business" and "in the UK," required authorizations per regulated activity, and available exclusions. Firms may apply for authorization from 30 September 2026 through 28 February 2027, ahead of the regime commencement date.
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