The UK Financial Conduct Authority is set to eliminate the Systematic Internaliser regime for bonds, derivatives, structured finance, and emission allowances from December 2025, aiming to simplify regulation and bolster market efficiency amid industry support.
The UK Financial Conduct Authority (FCA) has confirmed the removal of the Systematic Internaliser (SI) regime for bonds, derivatives, structured finance products, and emission allowances, with the changes taking effect from December 1, 2025. This move follows a comprehensive consultation process and signals a significant shift in the regulatory landscape aimed at streamlining market operations and enhancing transparency outside official trading venues. The SI regime, which continues to apply to equities, requires investment firms that trade on their own account while handling client orders off exchange to comply with specific transparency and conduct obligations.
According to the FCA’s Policy Statement PS25/17, the removal of the SI regime for these asset classes is intended to reduce complexity and improve market functioning. The regulatory framework no longer considers the current SI provisions for bonds and derivatives to contribute meaningfully to market competition or transparency. As a result, the FCA has also introduced related amendments, including changes to reference price waivers and the lifting of certain prohibitions on matched principal trading by investment firms.
Industry response to the FCA’s proposals has generally been supportive. The International Swaps and Derivatives Association (ISDA), along with the Association for Financial Markets in Europe (AFME) and the International Capital Market Association (ICMA), produced a joint paper emphasising the minimal disruption expected from the regime’s removal. Their analysis highlights the need for clear guidance to ensure a smooth transition and to help market participants adapt to the new trading environment. Similarly, ISDA and the Global Foreign Exchange Division (GFXD) expressed backing for the FCA’s proposals in their response to the consultation, recommending measures to mitigate any unintended consequences.
The FCA’s move to eliminate the SI regime for bonds and derivatives aligns with wider market reform efforts aimed at simplifying regulatory requirements and reducing operational costs for firms. In an accompanying statement, the FCA also outlined additional reforms, such as simplifying the regulatory perimeter for commercial users of commodity derivatives and refining the scope of advice guidance, underscoring its ongoing commitment to fostering open, competitive, and efficient markets.
Despite these changes, the SI regime remains in place for equities, with further consultations anticipated in 2026 to review future transparency and market structure considerations for equity markets. PwC UK notes that the FCA has introduced a new qualitative definition in its Perimeter Guidance (PERG) to clarify when an investment firm may be classified as a systematic internaliser, reflecting a nuanced approach to market transparency regulation.
Investment firms are advised to review the final policy documents to understand the implications for their operations and compliance frameworks, though no immediate action is required before the December implementation date. Overall, the FCA’s reforms represent a strategic effort to balance regulatory oversight with market efficiency, ensuring that the UK’s financial environment remains robust and adaptive to evolving market conditions.
- https://www.mlex.com/mlex/articles/2416307/uk-fca-removes-regime-covering-off-exchange-bond-derivatives-trading – Please view link – unable to able to access data
- https://www.fca.org.uk/publications/policy-statements/ps25-17-si-regime-bonds-derivatives – The UK Financial Conduct Authority (FCA) has published Policy Statement PS25/17, detailing the final rules on the systematic internaliser (SI) regime for bonds and derivatives. Effective from 1 December 2025, the SI regime will be removed for bonds, derivatives, structured finance products, and emission allowances. The FCA aims to streamline market operations and enhance transparency by eliminating the SI regime for these instruments. The policy statement also discusses other changes to improve the functioning of UK markets, including amendments to reference price waivers and the removal of certain prohibitions for investment firms. The FCA emphasizes that firms do not need to take any immediate action but should review the final rules to assess potential impacts on their operations and compliance.
- https://www.fca.org.uk/publications/consultation-papers/cp25-20-si-regime-bonds-derivatives – The FCA’s Consultation Paper CP25/20 addresses the systematic internaliser (SI) regime for bonds and derivatives, proposing its removal to align with the upcoming transparency overhaul. The consultation seeks feedback on the future of the SI regime, including the removal of prohibitions on matched principal trading and amendments to reference price waivers. The FCA acknowledges that the SI regime’s current provisions for bonds and derivatives do not significantly contribute to market competition or transparency. The consultation also includes a discussion paper on equity markets, indicating plans for further consultation in 2026. Responses to the consultation were due by 10 September 2025, with a final policy statement expected in Q4 2025.
- https://www.isda.org/2025/10/13/joint-paper-on-removal-of-si-regime-for-derivatives-and-bonds-in-the-eu-and-uk/ – The International Swaps and Derivatives Association (ISDA), along with the Association for Financial Markets in Europe (AFME) and the International Capital Market Association (ICMA), published a joint paper discussing the removal of the systematic internaliser (SI) regime for derivatives and bonds in the EU and UK. The paper highlights the minimal impact of this change on market participants and emphasizes the need for clarity regarding the discontinuation of the SI regime. It also addresses potential challenges and provides recommendations for a smooth transition. The joint paper aims to inform stakeholders about the practical implications of the regulatory change and to ensure a clear understanding of the new market dynamics.
- https://www.isda.org/2025/09/15/isda-gfxd-respond-to-fca-on-si-regime-for-derivatives-and-bonds/ – The International Swaps and Derivatives Association (ISDA) and the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association responded to the FCA’s consultation paper CP25/20 on the systematic internaliser (SI) regime for derivatives and bonds. They support the FCA’s proposal to remove the SI regime for these instruments and recommend measures to address potential side effects of implementing the proposal. The response also discusses the FCA’s discussion paper on equity transparency and market structure, expressing strong disagreement with the inclusion of equity derivatives in the scope of cash equity transparency. The response aims to provide constructive feedback to the FCA to ensure effective regulatory changes.
- https://www.fca.org.uk/news/statements/fca-statement-market-reforms-and-whats-come – The FCA has issued a statement outlining upcoming market reforms and their implications. The statement highlights the removal of the systematic internaliser (SI) regime for bonds and derivatives, aiming to reduce costs and complexity for firms. It also discusses other reforms, including the simplification of the regulatory perimeter for commercial users of commodity derivatives and changes to the advice guidance boundary. The FCA emphasizes its commitment to building on strong foundations and ensuring open and competitive markets. The statement provides an overview of the FCA’s ongoing efforts to enhance market efficiency and transparency.
- https://www.pwc.co.uk/industries/financial-services/understanding-regulatory-developments/fca-finalises-bond-and-derivatives-markets-transparency-rules.html – PwC UK discusses the FCA’s finalisation of bond and derivatives markets transparency rules. The article highlights the FCA’s new qualitative definition of when an investment firm is acting as a systematic internaliser (SI) and related guidance in the Perimeter Guidance (PERG) chapter. It also mentions the FCA’s inclusion of a discussion paper on the future of the SI regime, indicating plans for further consultation in Q2 2025. The article provides insights into the FCA’s efforts to improve market transparency and the functioning of UK markets.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
10
Notes:
The narrative is based on the FCA’s Policy Statement PS25/17, published on 28 November 2025, detailing the removal of the Systematic Internaliser (SI) regime for bonds, derivatives, structured finance products, and emission allowances, effective from 1 December 2025. ([fca.org.uk](https://www.fca.org.uk/publications/policy-statements/ps25-17-si-regime-bonds-derivatives?utm_source=openai))
Quotes check
Score:
10
Notes:
The report includes direct quotes from the FCA’s Policy Statement PS25/17, published on 28 November 2025, detailing the removal of the Systematic Internaliser (SI) regime for bonds, derivatives, structured finance products, and emission allowances, effective from 1 December 2025. ([fca.org.uk](https://www.fca.org.uk/publications/policy-statements/ps25-17-si-regime-bonds-derivatives?utm_source=openai))
Source reliability
Score:
10
Notes:
The narrative originates from the FCA’s official Policy Statement PS25/17, published on 28 November 2025, detailing the removal of the Systematic Internaliser (SI) regime for bonds, derivatives, structured finance products, and emission allowances, effective from 1 December 2025. ([fca.org.uk](https://www.fca.org.uk/publications/policy-statements/ps25-17-si-regime-bonds-derivatives?utm_source=openai))
Plausability check
Score:
10
Notes:
The narrative aligns with the FCA’s Policy Statement PS25/17, published on 28 November 2025, detailing the removal of the Systematic Internaliser (SI) regime for bonds, derivatives, structured finance products, and emission allowances, effective from 1 December 2025. ([fca.org.uk](https://www.fca.org.uk/publications/policy-statements/ps25-17-si-regime-bonds-derivatives?utm_source=openai))
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The narrative is based on the FCA’s Policy Statement PS25/17, published on 28 November 2025, detailing the removal of the Systematic Internaliser (SI) regime for bonds, derivatives, structured finance products, and emission allowances, effective from 1 December 2025. ([fca.org.uk](https://www.fca.org.uk/publications/policy-statements/ps25-17-si-regime-bonds-derivatives?utm_source=openai))