Key Industry Developments: Q2 2025 And Beyond

On 15 May 2025, HM Treasury (HMT) laid the Financial Services and Markets Act 2023 (Private Intermittent Securities & Capital Exchange System Sandbox) Regulations 2025 before Parliament.

In This Edition:

• Financial Services Growth and Competitiveness Strategy
• Digitisation and dematerialisation
• The Future of AIM
  
• Private company share trading
  
• Regulators and regulations to support growth
  
• Transparency
  
• Environmental, Social and Governance (ESG)
  
• Admission of securities to trading
  
• CREST transformation
  
• Accelerated Settlement T+1 (Settling a trade 1 day after execution)
  
• RLR (Remote Legal Record)
  

Financial Services Growth and Competitiveness Strategy

Will a digitisation agenda play a central role?

On 15 July 2025, Rachel Reeves is due to deliver the Financial Services Growth and Competitiveness Strategy at Mansion House. We expect digitisation will play a key role, and for our industry that could mean amongst other things digital shareholder communications and the dematerialisation of shares.

What’s next? 15 July 2025 Financial Services Growth and Competitiveness Strategy

Digitisation and dematerialisation

Will the Financial Services Growth and Competitiveness Strategy deliver change?

Digitisation could be one of the most significant changes the registration services industry we will see. The current expectation, although with no certainty, is that the final Digitisation Taskforce recommendations will be part of the Mansion House speech on 15 July 2025, when Rachel Reeves will set out the Financial Services Growth and Competitiveness Strategy. At EQ we have been supporting digitisation through development of our products and continue to encourage the digital journey.

Andrew Douglas, in a recent LinkedIn post highlighted the Treasury’s work to create a Digital Markets Roadmap and the recommendation he will be making to them for a Digital Markets Taskforce (DMT), to be a co-ordinating body between market segments and between the market and the public authorities. We look forward to the publication of the Digital Markets Roadmap and being part of the workstreams to deliver this.

What’s next? The Mansion House speech delivering the Financial Services Growth and Competitiveness Strategy on 15 July 2025.

The Future of AIM

AIM is 30 years old – a time to reflect, reinvent and refocus?

With the publication of the QCA’s Commission paper reviewing AIM and the LSE's discussion paper “Shaping the Future of AIM” closed for responses as of 16 June 2025, it will be important to consider the points discussed at the QCA conference, the QCA paper and the responses to the LSE to be reflected and considered. Any changes need to deliver support for AIM to play its role to help companies grow and scale and in turn generate value for investors and the UK economy. We, Equiniti, contributed to the discussion through our involvement in the QCA expert groups.

The QCA AIM Commission report noted that the number of companies using the platform stood at a 20-year low, noting that today, companies had many options to source funding. The report states it intends to stimulate the debate on assessing what AIM offers to entrepreneurs today, and what it lacks. Within the challenges, the report makes an interesting point about how “AIM must reassert its offer in a competitive marketplace”. Aligned to this the report notes the blurring of the difference between AIM and Main Market and the need to rebrand and emphasise what being on AIM offers. Under the consideration of culture and risk, the report notes compliance burden and AIM rule interpretation. With this being an element of the LSE Discussion paper, there is a great opportunity to reset what AIM rules. When discussing some of the challenges with the role of the Nomad, it was interesting to see the proposal to develop a more prominent role for company secretaries together with taking greater legal counsel on following the AIM Rules. Possibly one of the key areas of the report is entitled “Get Capital Flowing”, and the comment that the reason AIM had been so successful was the ability “to match good companies with good quality institutional investors….” The report suggested several solutions including: retaining business property relief on qualifying AIM shares; capitalising on the Mansion House Accord and Pensions Investment Review; Modernising venture capital schemes; reforming FCA lending guidance; revising the remint of the British Business Bank; National Wealth Fund Investment; and rethinking indexation.

What’s next? We await the outcome from the LSE Discussion Paper responses, which amongst other things considered the market framework and development of the AIM Rules.

Private company share trading

PISCES - the stage is set – lights, camera, action!

PISCES, the Private Intermittent Securities and Capital Exchange System, is designed to bring together buyers and sellers of shares in private companies. With regulations now in force from 5 June 2025, and the FCA rules in operation from 10 June 2025, market operators can now apply to operate a PISCES platform. It’s important to reflect that PISCES has been designed to support the UK’s international competitiveness and UK economic growth. Three key points on the latter are: enhancing private companies access to new investors so support UK companies to scale and grow; enabling private companies to use established market infrastructure; and finally, providing investors with earlier access to growth companies.
What’s next? The expectation is for first auctions to take place at the end of 2025 or beginning of 2026. This will require focus and input from a range of stakeholders to achieve this. Registrars are actively involved in discussions with Euroclear on the operation of the trading and settlement of securities.

Regulators and regulations to support growth

Proportionate regulation

March appeared to be a pivotal moment for setting out the regulators of the future. Treasury set outs it policy paper on a “New approach to ensure regulators and regulation support growth”,  at the same time as the FCA published its 5 year strategy and the FRC announced its 3 year plan. The Treasury policy paper stated “the current regulatory landscape is not functioning as effectively as it should. Our system now too often holds back growth and inhibits private sector investment”. So what is to be done? The policy paper sets out three actions: 1. tackle complexity and the burden of regulation; 2. Reduce uncertainty across our regulatory system; and 3. Challenge and shift excessive risk aversion in the system. Of note for the financial services sector, Treasury is planning on building on proposals put forward by the financial regulators including activities to make it easier for firms to navigate the UK regulatory landscape and broader barriers to entry; and develop a package of measure to enable the FCA to support early-stage innovative firms to start conducing regulated activities.

The FRC three-year strategy sets out five priorities to support economic growth. At the same time, we await the legislation to reform and modernise the FRC and expect the transition to ARGA (Audit, Reporting and Governance Authority) at least by the end of their 3-year strategy period.

What is clear is that with the focus on regulators and regulation we expect to see more changes in the future as the government deliver on their policy and the FRC and FCA deliver on their strategies.

Transparency

ECCTA – implementation continues…

The Economic Crime and Corporate Transparency Act (ECCTA) continues to be implemented in the UK. We are developing an ECCTA hub to assist with keeping track of the changes that have been implemented and those that are to come. Register of Member changes are a current focus with the work of the CGI Registrars Group continuing to work with the Department of Business and Trade to seek clarification and raise operational challenges with implementation, to ensure that industry knowledge and expertise can be taken into consideration for the final decisions for implementation.

What’s next? The CGI Registrars Group continue to seek clarification on the details of the changes for the Register of Members and an implementation timeline.

Environmental, Social and Governance (ESG)

A plethora of initiatives

It’s important to recognise the number of initiatives that are ongoing in the areas of E, S and G. Here is a flavour of some of them:

• Non-financial reporting: DBT are working with the FRC on options to reform the wider non-financial reporting framework to streamline and simplify it. We expect further consultation at the end of 2025.  
• Regulation of ESG rating providers: The FCA have been inviting ESG ratings providers to complete a voluntary survey to help inform the future regulation of ESG ratings and broader sustainability disclosures. The FCA intention is that the input from the survey will inform their cost benefit analysis (CBA), policy development and help ensure that the future regulation is both proportionate and tailored to the needs of the market.
• Sustainability Reporting: The FCA and government will introduce requirements for reporting against UK Sustainability Reporting Standards via FCA rules and the Companies Act.

And finally, we note the publication of the new Stewardship Code, which takes effect from 1 January 2026. The Code applies to asset owners, asset managers and service providers. Whilst the Code is voluntary the FRC state that “being a signatory to the Code demonstrates an investor’s commitment to stewardship and providing transparent reporting on the stewardship they undertake on behalf of their clients and beneficiaries.”

Admission of securities to trading

Making it easier to raise capital on UK markets?

Prospectus reform proposals aim to reduce the costs of listing on UK markets, make capital raising easier and remove barriers to retail participation.

What’s next? With the consultation closed we await the FCA Policy Statement, with new Prospectus Rules due imminently.

CREST transformation

The latest enhancements delivered 16th June 2025 provide EUI with increased operational tools to ‘Withhold Transactions’ that are deemed to have the potential to interrupt settlement.

EUI issued a consultation detailing proposals to utilise functionality to withhold transactions from settlement for increased resilience purposes, should issues with a transaction(s) prevent or disrupt wider settlement in CREST as well as another general resilience improvement within CREST.

After carefully considering the feedback received, EUI have confirmed that they have taken the decision to make available the functionality described in the consultation, for use by EUI if deemed necessary as described in the Consultation. The associated updates to the CREST Reference Manual to reflect these changes have also become effective on this date.
What’s next? Modernisation and standardisation of the communication network. EUI is working with its Network Partners to modernise the network by replacing the current bespoke legacy networks with standard services that support existing and new message formats.

The first step in the transformation is to modernise the CREST GUI and prepare for a browser-based web services user interface. EQ, as early adopters, have been working with EUI to provide testing feedback and as a result have already concluded installation and connectivity testing of the WebAPI / WebGUI+ solution.

As a second step in the CREST transformation, existing network providers (SWIFT and BT) replace CRNet and SettleNet with their standard secure messaging services. Both CRNet and SettleNet are bespoke, created only for the purpose of connecting clients to CREST, and remain largely unchanged for nearly 30 years. EQ will be responding to the latest Consultation, which is due to close Friday 18th July 2025. 

Accelerated Settlement T+1 (Settling a trade 1 day after execution)

UK and Europe, getting ready for October 2027

Andrew Douglas, Chair of the UK Accelerated Settlement Taskforce, recently spoke at a pan-European Implementation Forum with attendees from across a broad spectrum of sectors within the Financial Services Markets; in concluding he was pleased to report that the UK had already made good progress and urged ‘firms’ to continue to move forward with their plans at pace. EUI’s Charlie Pugh, Head of Product Management, outlined the work being undertaken with the CREST system in response to the actions outlined in the AST working paper.

What’s next? EQ to respond to the EUI T+1 Consultation paper; furthermore, remain observant and attend the various industry presentations on T+1 over the coming weeks and months, whilst also drawing upon the experiences of our US colleagues who went through this market shift in May 2024. 

RLR (Remote Legal Record)

Increased operational resilience

The RLR was removed on 16th June 2025 by EUI – no operational impacts to Issuers.
The technical architecture to maintain the RLR on UK soil is complex and creates a fragility in the EUI service delivery model, which historically has been the cause of settlement outages. Following a S166 report, the ability to temporarily operate without the RLR, known as SCARF Mode, was delivered as a significant resilience improvement in 2022. Following the recent market-wide consultation, EUI have decided to implement the proposals

What’s next? No further actions, initiative delivered.