The FCA’s inaugural Wholesale Markets Regulatory Priorities report signals a more structured and more demanding phase of supervision for firms, including wholesale banks and brokers, corporate finance firms, and principal trading firms. While the regulator continues to champion proportionate regulation and UK market competitiveness, it is equally clear that firms unable to evidence robust controls, resilient operations, and effective governance will face closer scrutiny.
The move away from portfolio letters towards annual, sector-specific priorities reflects the FCA’s ambition to be a more predictable and outcomes-focused regulator. For firms, it also removes any ambiguity about where supervisory attention will be directed.
From Portfolio Letters to Outcomes-Based Supervision
Individually, many of the themes set out in the report will be familiar to wholesale markets firms. Collectively, however, they signal a more assertive supervisory approach, with greater emphasis on evidence, outcomes, and senior management accountability. The priorities below highlight where the UK regulator will focus its supervisory engagement and where firms should expect increased scrutiny if weaknesses are identified.
1. Resilience is No Longer Just an Operational Issue
What the FCA is Trying to Achieve
The FCA is seeking to ensure that wholesale markets remain orderly and resilient, even during periods of stress. Operational, financial, and infrastructure weaknesses at individual firms are increasingly viewed through the lens of potential market-wide impact, rather than as isolated firm-level issues.
What’s Changing in Supervision
Supervisory focus is moving beyond whether firms have completed operational resilience mapping exercises, towards whether resilience is genuinely embedded in governance, systems, and decision-making. The FCA is explicitly linking operational incidents, trading disruption, and liquidity stress, and bringing third-party failures and technology outages firmly within the supervisory perimeter.
What This Means for Firms in 2026
Firms should expect more intrusive scrutiny of how resilience operates in practice, particularly where weaknesses could disrupt critical market services.
The FCA expects firms to:
- demonstrate robust scenario testing and credible incident response and recovery arrangements
- evidence effective oversight of third-party dependencies, including exit planning and accountability
- maintain trading controls that support fair and orderly markets during periods of stress
- ensure liquidity and wind down planning reflects severe but plausible market disruption
Taken together, these expectations reinforce that operational resilience is no longer assessed in isolation. Firms that cannot clearly evidence how resilience is embedded into governance, decision-making, and third-party oversight should expect closer supervisory engagement.
2. Market Reform Will Expose Weaknesses and Opportunities
What the FCA is Trying to Achieve
Through reforms to listing rules, consolidated tapes, and post-trade processes, the FCA aims to modernise UK wholesale markets, improve transparency, and support long-term competitiveness while maintaining confidence in market integrity.
What’s Changing in Supervision
As market reforms progress, the FCA is increasingly relying on data and market outcomes to assess effectiveness. Initiatives such as consolidated tapes and the transition to T+1 settlement materially increase supervisory visibility, reducing tolerance for fragmented governance or manual workarounds.
What This Means for Firms in 2026
Firms should prepare for a regulatory environment where data quality and operational readiness are more easily assessed and compared across the market.
The FCA expects firms to:
- assess data governance and reporting frameworks considering consolidated tape requirements
- demonstrate readiness for T+1 settlement across operations, funding, and client processes
- update conduct, conflicts, and disclosure frameworks in line with market reforms
- align technology investment with regulatory change, not solely efficiency objectives
As transparency increases and timelines compress, market reforms are increasingly being used by supervisors as practical tests of operational readiness. Firms that are slow to modernise systems, data governance, and operating models may find weaknesses surfaced more quickly and with less regulatory tolerance.
3. Innovation is Encouraged but Accountability is Non-Negotiable
What the FCA is Trying to Achieve
The FCA remains supportive of innovation in wholesale markets, including the use of AI, digital assets, and tokenised securities, where these developments enhance efficiency and competitiveness. However, innovation must be adopted in a controlled, well-governed and accountable manner.
What’s Changing in Supervision
Supervisory attention is increasingly focused on firms’ understanding of the technologies they deploy, particularly where reliance is placed on third-party models or vendors. The FCA is clear that outsourcing does not dilute responsibility and expects clear Senior Management Function (SMF) accountability for technology-related risks.
What This Means for Firms in 2026
Firms will be expected to demonstrate that technological innovation is supported by robust governance and effective oversight.
The FCA expects firms to:
- maintain a comprehensive inventory of AI and automated systems, including third-party tools
- evidence governance frameworks covering testing, validation, and model explainability
- strengthen third-party risk management and contractual safeguards
- prepare for the incoming regulatory regime for digital assets and tokenised securities
The FCA is emphasising that innovation is welcome, but only where risks are understood, governed, and owned. Firms that rely on complex or third-party technologies without clear accountability or explainability are likely to face supervisory challenge.
4. Market Integrity Remains to be the Foundation
What the FCA is Trying to Achieve
Preventing market abuse and financial crime remains central to the FCA’s mandate to preserve confidence in wholesale markets. Effective transaction reporting, surveillance, and governance are viewed as critical enablers of market integrity.
What’s Changing in Supervision
The FCA is placing greater emphasis on whether firms can evidence the effectiveness of their controls, rather than relying on internal assessments alone. As transaction reporting reform progresses, data accuracy, completeness, and resilience are becoming more prominent supervisory touchpoints.
What This Means for Firms in 2026
Firms should expect more targeted supervisory engagement where weaknesses in market abuse or financial crime controls are identified.
The FCA expects firms to:
- evidence the effectiveness of anti-money laundering (AML), counter-terrorist financing (CTF) and market abuse frameworks through independent challenge
- maintain accurate, complete, and resilient transaction reporting systems
- use data and management information to support surveillance and escalation
- remediate identified weaknesses ahead of forthcoming transaction reporting reforms
In an increasingly data-led supervisory environment, firms must be able to evidence that market abuse and financial crime controls operate effectively in practice. Assertions of compliance without demonstrable outcomes are unlikely to meet supervisory expectations.
5. Conflicts and Conduct Oversight Remain Under Scrutiny
What the FCA is Trying to Achieve
The FCA continues to highlight the risk to market integrity where conflicts of interest are poorly identified or managed. Its objective is to ensure that governance, remuneration, and conduct frameworks support fair outcomes and maintain trust in wholesale markets.
What’s Changing in Supervision
Supervisory reviews have identified weaknesses in conflicts management, incentive structures, and conduct oversight, particularly where commercial pressures are not sufficiently balanced by governance and challenge. The FCA is refining expectations across specific market segments and reviewing the effectiveness of compliance functions.
What This Means for Firms in 2026
Firms should reassess whether conflicts frameworks remain effective as business models and regulatory expectations evolve.
The FCA expects firms to:
- maintain robust, well-documented conflicts of interest frameworks
- ensure remuneration and incentive structures align with prudent risk management
- evidence active oversight and challenge by compliance and senior management
- prepare for forthcoming consultations affecting wholesale conduct and conflicts rules
As business models evolve and competitive pressures increase, conflicts and conduct risks remain firmly within the FCA’s supervisory focus. Firms that fail to keep governance, incentives, and oversight frameworks aligned to these risks should expect increased scrutiny.
Next Steps for Firms
Boards and senior management should expect the FCA to test whether the Wholesale Markets Regulatory Priorities report has been actively considered, debated, and translated into action, rather than simply noted. Taken together, the priorities reinforce a clear message that regulatory expectations are rising in sophistication, not just in volume, and firms are increasingly expected to demonstrate how governance and controls operate in practice.
As part of the FCA’s new Regulatory Priorities framework, firms are required to confirm to the FCA, via RegData, within 30 days of publication that the report has been reviewed at an appropriate governance forum and that any necessary actions will be taken. Firms are encouraged to log in to RegData to review and complete the filing.
This confirmation is not intended to be a procedural exercise. Supervisors have been clear that they expect firms to be able to evidence meaningful consideration, challenge, and follow through, particularly where weaknesses in resilience, data quality, or governance could affect market integrity.
In practice, this means firms should:
- review the Wholesale Markets Regulatory Priorities at board or senior management level
- assess how each priority applies to their specific business model, activities, and risk profile
- identify any gaps between current arrangements and supervisory expectations
- agree clear ownership, actions, and timelines where remediation or enhancement is required
The filing requirement reinforces that outcomes-based supervision starts with senior accountability. Firms that treat this as a tick-box exercise risk follow-up challenge, while those that use it as an opportunity to test the effectiveness of governance and controls will be better positioned as supervisory engagement intensifies through 2026.
What Senior Management Should Take from This
Taken together, the FCA’s Wholesale Markets Regulatory Priorities underline a clear supervisory shift. Credibility will increasingly be judged by evidence, not intention. Governance frameworks must operate effectively under stress, innovation must be accompanied by oversight, and firms must be able to demonstrate that controls deliver outcomes, not just compliance.
For boards and senior management, this is not about wholesale regulatory change; it is a signal of heightened expectations around accountability, resilience, and transparency.
Firms that invest in resilient systems, clear accountability, and effective challenge will be better positioned not only to meet supervisory expectations, but to operate confidently in a more transparent and fast-moving market, as the FCA’s outcomes-based supervision of wholesale markets continues to mature through 2026. Working with a third-party provider can help firms bring structure, objectivity, and additional rigour to how these expectations are assessed and evidenced.
Operationalise Outcomes-Based Supervision
ACA helps investment firms translate evolving FCA supervisory expectations into practical, defensible action.
Our support focuses on ensuring firms can evidence outcomes, not just frameworks, across key priority areas. This includes:
- conducting targeted gap analysis against FCA supervisory priorities
- reviewing governance frameworks to ensure effective oversight and accountability
- assessing operational resilience, third-party risk, and market abuse controls
- preparing board and senior management materials to evidence challenge, decision-making, and action
We work with firms to ensure they are not only aligned with regulatory expectations, but able to demonstrate this clearly under supervisory scrutiny. To discuss how these priorities apply to your firm, contact our team.