UK MiFIR: Phase Two of FCA Transparency Reforms Now Live
In an effort to create a simpler, more effective regime for UK wholesale markets, 1 December 2025 saw the implementation of the FCA’s second phase of reforms for trade transparency rules under UK MiFIR.
The rules create an overall regime not so dissimilar in approach, and reforms seen, in the United States and EU respectively with streamlined transparency obligations for equities, bonds and certain derivatives, creating simplified reporting responsibilities, fewer deferrals and targeted exemptions for nonpriceforming trades.
The changes were announced in PS 23/4 for equity markets and PS 24/14 for bond and derivatives markets and split across two main implementation phases:
- the equity regime (in force since April 2024) and
- the bond and derivatives (“non-equity”) regime (which came into force on 1 December 2025).
Scope and reporting obligation
For equities and equity like instruments, trading venues and investment firms that deal on own account or execute client orders (i.e., a “Transparency Investment Firm”) must continue to publish post-trade reports, but the rules align more clearly with what is reported onvenue versus over-the-counter (OTC) and in each case which counterparty is responsible for making the transparency report.
For bonds and derivatives, the regime is narrowed to bonds admitted to trading on a venue and a defined set of OTC derivatives subject to the clearing obligation; other OTC instruments fall are now exempted (including, for example, FX derivatives).
In the non-equity regime, instruments are split into two categories: for Category 1, the FCA sets post trade transparency obligations for both trading venues and investment firms, while for Category 2, venues must set transparency according to FCA criteria but investment firms have no direct posttrade transparency obligation.
Below is a digest of both the regimes together with how the changes impact Systematic Internalisers and the definition thereof.
1. Equity Post-Trade Transparency (PS 23/4)
- Designated Reporter Regime (DRR): The FCA decoupled post-trade reporting obligations from Systematic Internaliser (SI) status. Instead of relying on SI status to determine who reports, firms can elect to become a Designated Reporter.
- Who reports? If one party is a Designated Reporter (DR) and the other is not, the DR reports. If both or neither are DRs, the seller generally reports, unless otherwise agreed (e.g., the buyer agrees to report on the seller’s behalf).
- Content of Reports: The rules amended the content of trade reports by adding new fields (such as for identifying the central counterparty and unique product identifiers) and removing redundant flags to make data more readable and consistent.
- Exemptions: Specific non-price forming transactions (e.g., certain inter-affiliate trades and expanded categories of giveup/givein transactions) are explicitly exempt from post-trade reporting to reduce market “noise.” Inter-fund transfers continued to remain exempt.
2. Bond and Derivatives Post-Trade Transparency (PS 24/14)
- Simplified Deferrals: The complex system of waivers and deferrals has been replaced with a streamlined framework, summarised thus:
- Bonds: Deferrals are now based on just two key variables: the size of the trade (relative to liquidity) and the type of bond. The previous regime of deferrals has been removed in favour of standardised delays (e.g., 15 minutes, end of day, or T+1) to ensure timely publication while protecting liquidity providers.
- Derivatives: Transparency obligations now focus on derivatives subject to the clearing obligation and those admitted to trading on venues.
- Category 1 vs. Category 2: Instruments are split into two categories.
- Category 1: The FCA sets strict transparency requirements (e.g., for liquid bonds).
- Category 2: Trading venues have greater flexibility to set their own transparency rules (though must still facilitate price formation), so effectively removing the direct transparency obligation for investment firms trading these instruments OTC.
- Portfolio Trades: A specific 15-minute deferral is available for package and portfolio trades to account for their booking complexity.
Systematic Internaliser (SI) Changes (PS 25/17)
- Removal of Pre-Trade Transparency: The FCA confirmed the removal of pre-trade transparency obligations for SIs in bonds and derivatives, meaning SIs no longer need to publish firm quotes for these instruments.
- Reporting Impact: While SI status no longer dictates who reports post-trade (thanks to the DRR mentioned above), SIs remain a key part of the market structure. The FCA has paused some proposals to completely remove the SI definition for reporting purposes until further consultation in 2026, ensuring no loss of data granularity in the interim.
Practical next steps
Firms must understand their reporting status in the new world and ascertain where reporting obligations lie by instrument type and counterparty, particularly when trading OTC derivatives. Here, and indeed elsewhere, buy-side firms must check the FCA register to confirm their counterparty’s DR status to ensure no trades go unreported or are double-reported.
Even with simplification being the abiding intention, change management is required which, in turn, introduces operational challenges. Firms should ensure they have that understood and responded appropriately to the new transparency regime, which continues to remain a important and high profile compliance obligation.
