March 2026 – April 2026 EU-UK Regulatory Round-up - Fund Management/ REITs

Article Insights

Ezra Zahabi’s articles from Akin Gump Strauss Hauer & Feld LLP are most popular:

with Finance and Tax Executives
with readers working within the Securities & Investment and Law Firm industries

Executive Summary

This Regulatory Round-up highlights a selection of significant EU and UK developments during March and April 2026 that are of relevance to asset managers, including:

ESMA’s publication of final guidelines on liquidity management tools for managers of UCITS and open‑ended AIFs, setting out expectations on the selection, calibration and activation of liquidity management tools.
The implementation of the AIFMD II from 16 April 2026 and the implications of its revised Article 42 national private placement regime conditions on EU marketing by BVI managers and funds.
The Court of Justice of the European Union’s preliminary ruling on the scope of “inside information” under the EU Market Abuse Regulation, clarifying that certain communications relating to insider status may themselves constitute inside information, and confirming that information may still be inside information even if later shown to be incorrect, provided it was credible at the time.
The FCA’s publication of its 2026 regulatory priorities for the wholesale buy side sector, replacing the previous “Dear CEO” letters and setting out supervisory expectations in areas including governance, Consumer Duty implementation, private markets, use of emerging technologies and operational resilience.
The coming into force of the UK Consumer Composite Investments regime, a new retail disclosure framework that replaces the Packaged Retail and Insurance-based Investment Products regime and UCITS Key Investor Information Document’s requirements.
The FCA’s publication of its final rules for a new UK short selling regime that replaces the onshored EU Short Selling Regulation from 13 July 2026.
The FCA’s consultation for guidance on how its regulatory perimeter and permissions will apply to new cryptoasset-related regulated activities, final guidance is expected to be published in September 2026.

1. ESMA Publishes Final Guidelines on Liquidity Management Tools for Managers of UCITS and Open-Ended AIFs

On 12 March 2026, the European Securities and Markets Authority (ESMA) published its final guidelines on the selection, activation and calibration of liquidity management tools (LMTs) by managers of Undertakings for Collective Investment in Transferable Securities (UCITS) and open-ended Alternative Investment Funds (AIFs).¹

The guidelines form the third layer of the European Union’s (EU) attempt to create a harmonised framework for LMT use by managers of UCITS and open-ended AIFs:

The recently introduced changes to the UCITS Directive and the Alternative Investment Fund Managers Directive (AIFMD) require managers of UCITS and open-ended AIFs to select at least two LMTs from a harmonised list included in each Directive.
The European Commission adopted regulatory technical standards (RTS), which were published in the Official Journal of the European Union on 27 February 2026, that define the characteristics and operation of LMTs under the UCITS Directive² and the AIFMD³, including specifying activation thresholds, calculation methodologies and operational constraints.
The guidelines provide guidance as to supervisory practices to ensure common and consistent application for the selection, activation and calibration of LMTs by managers of UCITS and open-ended AIFs.

The guidelines confirm that primary responsibility for liquidity risk management remains with the manager of the UCITS or open-ended AIF. Whilst the UCITS Directive and the AIFMD require managers to select at least two LMTs, ESMA has clarified that managers may select more than two tools and may also use additional liquidity measures.

The guidelines apply from the date of application of the RTS, i.e. from 16 April 2026 onwards.

Funds in existence before this date benefit from a 12-month transitional period, with compliance under the RTS and guidelines required by 16 April 2027, though such funds must comply with the primary requirements of each Directive with respect to selection of at least two LMTs from 16 April 2026 onwards.

2. AIFMD II and Its Implications for BVI-Domiciled Managers and Funds

16 April 2026 was the deadline for member states of the EU to transpose amendments made by EU Directive to the Alternative Investment Fund Managers Directive (AIFMD II) into national law.⁴ For member states that have completed the transposition of the AIFMD II rules, this date is also the point from which most measures begin to apply, subject to the commencement provisions of the relevant national legislation.

In addition to the more-heralded amendments introduced relating to liquidity risk management and the loan origination regime for funds, the AIFMD II also amends the national private placement regime pre-conditions under Article 42 of the AIFMD for non-EU managers (non-EU AIFMs) to market funds (non-EU AIFs) to EU investors.

Specifically, under the AIFMD II, the relevant third country domicile or domiciles of the non-EU AIFM and/or non-EU AIF must satisfy revised jurisdictional conditions:

Appropriate cooperation arrangements for the purpose of systemic risk oversight and in line with international standards must be in place between the competent regulator of the EU jurisdiction in which the non-EU AIF is intended to be marketed and the home regulator of the (i) non-EU AIFM and (ii) non-EU AIF, to ensure an efficient exchange of information that allows the relevant EU regulator to carry out their duties in accordance with the AIFMD.
The non-EU AIFM and non-EU AIF must not be established in a third country identified as a high-risk third country under EU anti-money laundering (AML) legislation (specifically, pursuant to Article 9(2) of Directive (EU) 2015/849).
The non-EU AIFM and non-EU AIF must be established in a third country that has signed an agreement with the relevant EU member state in which the units or shares of the non-EU AIF are intended to be marketed which fully complies with the standards laid down in Article 26 of the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention on Income and on Capital and ensures an effective exchange of information in tax matters, including any multilateral tax agreements.
The third country in which the non-EU AIFM and non-EU AIF is established must not be included in Annex I to the EU list of non-cooperative jurisdictions for tax purposes.

Notably, the British Virgin Islands (BVI) was added to the EU’s high-risk third country list under EU AML Legislation on 29 January 2026. Accordingly, the marketing of BVI AIFs or by BVI AIFMs would not meet the preconditions under Article 42 of the AIFMD in such member states that have implemented the relevant provisions of the AIFMD II.

Managers with existing BVI funds registered under Article 42 of the AIFMD will need to consider steps to address the implications of the new rules.

3. The Court of Justice of the European Union Makes Preliminary Ruling on the Scope of Inside Information Under EU MAR

The Court of Justice of the European Union (CJEU) made a preliminary ruling regarding the scope of “inside information” under the EU Market Abuse Regulation (EU MAR) on 19 March 2026.⁵

The case arose from communications from an issuer to a third party indicating that the issuer’s CEO had been placed on the issuer’s insider list and was consequently prevented from dealing in the issuer’s shares. The Swedish Financial Supervisory Authority (SFSA) issued proceedings against the third-party recipient of the communication, claiming that it had infringed the prohibition against insider trading provided for in EU MAR on the basis of the issuer’s communication, which the SFSA deemed to amount to “inside information” within the meaning of EU MAR. The case was eventually appealed to the Högsta domstolen (Sweden’s Supreme Court), which referred the case to the CJEU for a preliminary ruling.

The CJEU’s judgment states that a communication from an issuer to the effect that a person has been included in an insider list and is prevented from selling shares in that issuer, even if the reasons for the person’s inclusion are not clear from the communication, is capable of constituting information which is “of a precise nature” within the meaning of the EU MAR, if a reasonable investor would be likely to use that communication as part of the basis of his or her investment decisions.

Further, the ruling also states that information which later proves to have been incorrect at the time it was communicated may still constitute inside information, provided it was credible at the time and capable of conferring an economic advantage on the recipient.

Whilst the CJEU’s judgment concerns the provisions of EU MAR, it is likely to be informative to the application of the UK’s Market Abuse Regulation, which contains the same definition of “inside information” as under EU MAR.

4. The FCA Publishes Its 2026 Regulatory Priorities for the Wholesale Buy Side Sector

Over the course of late February and March 2026, the Financial Conduct Authority (FCA) published its 2026 Regulatory Priorities, including for the wholesale buy side sector on 19 March.⁶

The FCA has published nine sector reports, and describes them as a clear and succinct one-stop shop guide for firms’ boards and chief executives. The Regulatory Priorities Reports will replace FCA sector portfolio letters—commonly referred to as “Dear CEO letters”.

The report for the wholesale buy side sector will be relevant for traditional asset managers and alternative asset managers as to the FCA’s supervisory expectations in a number of priority areas, as summarised below.

Accordingly, the boards and CEOs of UK-authorised asset managers should carefully review the report to ensure that they understand what the FCA expects and take action to reflect recommendations made by the FCA.

*FCA Priority*	*What does the FCA Expect Firms to do?*	*What are the FCA’s Key Proposals for 2026?*
Evolve regulation to foster growth and innovation and serve changing consumer needs	Firms are expected to implement robust governance for emerging technologies: in particular, to establish clear accountability, risk management and oversight for the use of artificial intelligence (AI), distributed ledger technology (DLT) and other new technologies.	• Consult on plans for an effective, predictable and proportionate regulatory regime for alternative investment fund managers. • Transform the regulatory data model for asset managers and funds to make the regime more proportionate and remove unnecessary reporting and incorporate global data standards. • Work to digitise and simplify the fund authorisation process. • Consult on streamlining product-level Task Force on Climate-related disclosure reporting requirements.
Deliver good outcomes to consumers	Firms are expected to: • Embed the Consumer Duty. • Apply a consumer lens to products and services, such as model portfolio services and retirement solutions. • Provide clear communications to investors to enable informed investment decisions. • Maintain strong oversight of appointed representatives and make sure Consumer Duty expectations are met.	• Progress multi-firm review of model portfolio services. • Focus on outlier firms that design products and services that do not consider consumers’ best interests. • Engage with firms that are developing retail private markets and retirement income products. • Support further implementation of the Sustainability Disclosure Requirements (SDR) and labelling regime. • Finalise the FCA’s policy regarding client categorisation and conflicts of interest. • Consult on clarifying the application of the Consumer Duty across distribution chains and to wholesale firms.
Reinforce consistent, high standards across private market investing	Firms are expected to: • Review and update governance and processes for valuations. • Ensure robust processes are in place for identification, management and mitigation of conflicts of interest. • Align product development frameworks for retail products and retirement solutions.	• Engage with private market firms on good practices with respect to valuations, conflicts of interest and risk management. • Support the Bank of England as it conducts a new private markets system-wide exploratory scenario. • Undertake focused supervisory work on private markets firms’ approaches to risk management.
Preserve market integrity and resilience to disruption	Firms are expected to: • Strengthen operational resilience and embed it into processes such as new product design and change management. • Maintain robust incident response and recovery plans. • Assess and manage dependencies on material third party providers, ensuring robust due diligence and ongoing monitoring of resilience capabilities. • Strengthen governance frameworks to manage the firm’s impact on markets, with a focus on effective risk management of investment models and strategies employing leverage, concentrations and use of newer technologies like AI. • Act as good market participants by ensuring strong systems and controls are in place to detect and prevent market abuse.	• Continue the FCA’s data-led approach to identifying outlier firms and funds with high leverage, illiquidity or concentrated investment strategies to ensure appropriate risk management and liquidity management is in place. • Collect information from a cross section of firms to understand the maturity of firms’ insider risk management. • Finalise rules on improving the UK transaction reporting regime, with a policy statement expected in Q3 2026.

5. The New UK Consumer Composite Investments Regime Comes Into Force

As of 6 April 2026, the new UK Consumer Composite Investments (CCI) regime has come into force and will run in parallel with the current regime until 8 June 2027.

The new CCI regime is introduced principally via the Consumer Composite Investments (Designated Activities) Regulations 2024 (as amended) (CCI Regulations) and new rules in the FCA Handbook (including in the Product Disclosure sourcebook (DISC)), which will replace the existing EU-onshored UK Packaged Retail and Insurance-based Investment Products (PRIIPs) regime and UCITS disclosure rules.

The aim of the new CCI regime is to move away from the current prescriptive format requirements to allow firms greater flexibility in how they provide information to UK consumers.

However, the FCA has set out a minimum set of standardised requirements to allow retail investors to compare information regarding costs, risk/return, and past performance.

Firms involved in the manufacture or distribution of CCIs to UK retail investors should ensure that their processes and documentation are updated in time for the new CCI regime.

CCI Product Scope

The statutory definition of a CCI is:

“an investment or a contract of insurance, or any right to or interest in an investment or a contract of insurance, where the value or amount payable to the investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the investor.”

The FCA has listed products which it considers will be CCIs, which include fund interests, structured deposits and structured products. The examples listed by the FCA are not exhaustive and firms will need to consider whether their products are CCIs by reference to the statutory definition.

The CCI Regulations and FCA rules explicitly exclude certain products from the scope of CCIs, including:

Vanilla corporate bonds
Pension products
Units in authorised contractual schemes or in qualified investor schemes
Pure protection insurance contracts.

Firms in Scope of CCI Regime

Firms in scope of the CCI regime include those that manufacture or distribute CCIs to UK retail investors.

The activity of manufacturing will include creating, developing, designing, issuing, managing, operating or carrying out a CCI or making changes to a term, condition or feature of a CCI. A product may be considered to have more than one manufacturer and there are specific rules to address this.

A person is likely to be considered to be a distributor if they advise on, offer or sell a CCI.

Accordingly, both UK authorised firms as well as unregulated firms (including those based outside the UK) are within scope of the new CCI regime if their activities are directed at UK retail investors.

The FCA has explicitly confirmed that the new CCI regime will apply to overseas firms that wish to promote products to UK consumers.

The new CCI rules do not apply in relation to a CCI where it is distributed to investors:

Who are not retail investors.
Who are not in the United Kingdom.

The rules make clear that a CCI will not be subject to DISC where:

Communications and marketing materials are clearly marked as not for retail.
The manufacturer takes steps to ensure that the product is not directed to retail investors, including setting an appropriate distribution strategy.

6. The FCA Publishes Its Final Rules for a New UK Short Selling Regime

On 16 April 2026, the FCA published its new rules and guidance for short selling activity in the UK in the form of a policy statement and an operational guide.⁷

The new UK short selling regime will replace the EU-onshored Short Selling Regulation from 13 July 2026. However, the FCA’s system updates to enable submission of multiple positions in a single ‘bulk submission’ will take effect on 30 November 2026.

The FCA’s final rules follow the FCA’s previous consultation on proposals to revise the UK short selling regime in October 2025.⁸ The final rules largely reflect the proposals contained in the earlier consultation.

Below is an overview of the key features of the new UK short selling regime.

The reporting deadline is being extended from 3:30 pm to 11:59 pm UK time on T+1. For U.S. firms, this extension of eight and a half hours will prove welcome news, in effect extending UK business hours to most U.S. time zones.
The UK will retain the current private net short position disclosure threshold at 0.2% (note: this threshold is 0.1% for issuers in scope of the EU short selling rules). However, the public disclosure (at 0.5%) will be removed and the FCA will instead publish aggregated data showing the overall size of net short positions in each company rather than identifying individual short sellers.
UK sovereign credit default swaps are outside the scope of position reporting and covering requirements.
A new reportable shares list will replace the list of exempt shares and set out the shares that are subject to the UK short selling rules.
The new regime will allow firms to submit a single ‘bulk submission’ covering multiple positions.

Firms should take note that the EU Short Selling Regulation will continue to operate unchanged and will not mirror the changes introduced to the new UK regime.

Accordingly, firms subject to both the EU and UK short selling regimes will need to ensure compliance with two distinct regimes in the EU and the UK. Firms should review their reporting systems and ensure appropriate updates are made in time to implement the new UK short selling regime, and, where necessary, manage divergence with the EU rules.

7. The FCA Publishes a Consultation on Cryptoasset Perimeter Guidance

From 25 October 2027, a new UK regulatory regime will bring regulated activities for cryptoassets within the FCA’s regulatory perimeter (Cryptoasset Regulations).⁹

Accordingly, persons that carry on cryptoasset regulated activities in the UK will require authorisation from the FCA unless an exclusion is available.

On 15 April 2026, the FCA published a consultation paper that proposes guidance to clarify the scope of the new cryptoasset regulated activities under the Cryptoasset Regulations.¹⁰

The guidance is proposed as a new chapter in the FCA’s Perimeter and Guidance Manual (PERG).

The consultation will be of interest to asset managers that may be considering whether their activities would require them to seek authorisation from the FCA under the new UK regime.

The consultation is open until 03 June 2026, and the FCA expects to publish final guidance in September 2026.

Key topics covered by the proposed PERG guidance include:

When cryptoasset regulated activities are regarded as being carried on “by way of business” and “in the UK”.
Clarifying the authorisations required for each regulated cryptoasset activity.
Clarifying the scope of exclusions.

It is worth noting that firms seeking to carry on regulated cryptoasset activities can make an application to the FCA from 30 September 2026 to 28 February 2027, before the Cryptoasset Regulations regime commences on 25 October 2027.

Footnotes

1 ESMA Guidelines on Liquidity Management Tools (LMTS) of UCITS and Open-ended AIFs, 12 March 2026 : https://www.esma.europa.eu/sites/default/files/2026-03/ESMA34-671404336-1364_Guidelines_on_liquidity_management_tools_of_UCITS_and_open-ended_AIFs.pdf.

2 Commission Delegated Regulation (EU) 2026/466 of 17 November 2025 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to regulatory technical standards specifying the characteristics of liquidity management tools: https://eur-lex.europa.eu/eli/reg_del/2026/466/oj/eng.

3 Commission Delegated Regulation (EU) 2026/465 of 17 November 2025 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the characteristics of liquidity management tools: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:32026R0465.

4 Directive (EU) 2024/927 of the European Parliament and of the Council of 13 March 2024 amending Directives 2011/61/EU and 2009/65/EC as regards delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services, and loan origination by alternative investment funds: https://eur-lex.europa.eu/eli/dir/2024/927/oj/eng.

5 Judgment of the Court (Fourth Chamber) of 19 March 2026. Finansinspektionen v Carnegie Investment Bank AB: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:62024CJ0363.

6 FCA, Regulatory Priorities: Wholesale Buy Side, 19 March 2026: https://www.fca.org.uk/publication/regulatory-priorities/wholesale-buy-side-report.pdf.

7 FCA PS26/5: Changes to the Short Selling Regime and Operational Guide, 16 April 2026: https://www.fca.org.uk/publications/policy-statements/ps26-5-changes-uk-short-selling-regime.

8 FCA CP25/29: Changes to the Short Selling Regime, 28 October 2025: https://www.fca.org.uk/publication/consultation/cp25-29.pdf.

9 For more information on the evolving cryptoasset regime, please see previously published client alerts: https://www.akingump.com/en/insights/alerts/september-2025-october-2025-euuk-regulatory-update#a; and https://www.akingump.com/en/insights/alerts/uk-and-eu-asset-management-2026-regulatory-outlook#i.

10 FCA CP26/13: Cryptoasset Perimeter Guidance, 15 April 2026: https://www.fca.org.uk/publications/consultation-papers/cp26-13-cryptoasset-perimeter-guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

[View Source]

March 2026 – April 2026 EU-UK Regulatory Round-up

Contributor