FCA Publishes Final Rules on Systematic Internaliser Regime for Bonds and Derivatives and Matched Principal Trading by MTF Operators

On 28 November 2025, the Financial Conduct Authority (FCA) published a policy statement (PS25/17) finalising rules proposed in its July 2025 consultation paper (CP25/20). The reforms remove the Systematic Internaliser (SI) regime for bonds and derivatives, lift restrictions on matched principal trading by multilateral trading facility (MTF) operators, and reform the reference price waiver (RPW) for equity instruments. 

An SI is a UK or EU regulated investment firm that, when executing client orders outside a trading venue, trades on its own account on an organised, frequent, systematic and substantial basis. It is a regulatory classification under MiFID II and UK MiFIR, carrying specific transparency and reporting obligations, including publishing pre-trade quotes and reporting post-trade information.

For further information on CP25/20, see our previous article available here.

Summary of Final Rules

Following broadly supportive consultation responses, the FCA has finalised the following key changes:

• removal of the SI regime for bonds, derivatives, structured finance products and emission allowances;
• removal of the prohibition on matched principal trading by appropriately permissioned investment firms operating an MTF;
• removal of the prohibition on an investment firm that is an SI from operating an organised trading facility (OTF) within the same legal entity; and
• reform of the RPW to allow trading venues to source reference prices from a broader set of venues.

Removal of the SI Regime for Non-Equity Instruments

The FCA states that the SI regime for bonds and derivatives no longer contributes meaningfully to transparency or market integrity following the removal of pre-trade transparency obligations for SIs in these asset classes under a prior policy statement, PS24/14, published in November 2024. The regime is being abolished for bonds, derivatives, structured finance products and emission allowances, while the equity SI regime remains in place.

Further, the FCA confirms that it will end-date all SI notifications for non-equity instruments on its register, meaning firms will not need to notify the FCA to de-register. The statutory opt-in mechanism under Schedule 2 to the Financial Services and Markets Act 2023 will only be available for equity SIs going forward. 

Matched Principal Trading and OTF Reforms

The FCA is removing the prohibition that previously prevented investment firms operating an MTF from engaging in matched principal trading on that MTF. The FCA notes that existing conflict of interest and conduct rules remain appropriate to manage associated risks. Firms will need to hold the appropriate permission for dealing as principal and will be subject to a permanent minimum capital requirement of £750,000 under the Prudential Sourcebook for MiFID investment firms. 

The FCA is also removing the restriction that prevented an investment firm classified as an SI from operating an OTF within the same legal entity. The FCA expects clients of the OTF to be made aware of activities that the operator carries out in a principal capacity outside the OTF, with any conflicts managed in accordance with conflict management provisions.

Reference Price Waiver Reforms

The FCA is proceeding with its proposal to allow trading venues operating under the RPW to source the mid-price from a wider set of trading venues, rather than being limited to the venue where the instrument was first admitted to trading or the most relevant market in terms of liquidity. The FCA notes this change aims to improve execution quality and strengthen market resilience, particularly during outages.

However, the FCA is not proceeding at this stage with the second proposed change to the RPW, which would have allowed mid-price dark orders to be placed on lit order books. Respondents raised concerns about the potential impact on the readability of post-trade transparency data. The FCA states that it is minded to implement this change following further consultation on how to identify the execution of dark orders within lit order books, which it expects to address in a forthcoming consultation on equity market structure and transparency in 2026.

Next Steps

The changes in PS25/17 are permissive and do not create new obligations, unless firms choose to take advantage of the new opportunities afforded by the changes. 

Most measures took effect from 1 December 2025, with equity transparency handbook changes commencing on 30 March 2026 and transitional relief through 30 June 2026 for trading venues updating their rulebooks.

PS25/17 is available here.