The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2025
The Treasury enacted this Order using powers under the Financial Services and Markets Act 2000 to amend the Regulated Activities Order 2001, primarily by revising the exclusion criteria for firms dealing in commodity derivatives, emission allowances, and derivatives from the definition of an "investment firm." The amendment introduces the option for exclusion based on activities being ancillary to the firm's main business (assessed on a group basis) or falling below an annually determined threshold set by the Financial Conduct Authority (FCA), with the FCA granted rule-making powers to specify these conditions.
The Order also makes consequential amendments necessitated by the revocation of Commission Delegated Regulation (EU) 2017/592, establishing commencement dates across late 2025 and early 2027.
Arguments For
The order modernizes the criteria for excluding certain firms dealing in commodity derivatives, emission allowances, and derivatives from the full "investment firm" definition by introducing alternative thresholds, potentially reducing regulatory burden for appropriately sized operations.
Providing the FCA with power to make rules regarding ancillary activity criteria and annual thresholds allows for greater regulatory flexibility, enabling rules to be tailored to current market conditions and group structures.
Removing references to specific EU legislation (like Commission Delegated Regulation (EU) 2017/592) updates UK domestic law post-Brexit, ensuring regulatory consistency with current UK legislative frameworks.
The phased commencement allows market participants time to adapt to the new requirements: Article 1 and Article 2(d) on 10th December 2025, and the main provisions on 1st January 2027.
Arguments Against
Changing the definition and exemption criteria for 'investment firm' introduces legal uncertainty until the FCA finalizes the specific rules regarding group ancillary activity criteria and annual thresholds.
While intended to reduce burden, adjusting exclusion criteria might lead to complexity in determining compliance, especially for firms operating across complex group structures or engaging near the undecided annual thresholds.
The consequential amendments (Article 4) stemming from the revocation of EU Regulation 2017/592 necessitate a review of existing compliance frameworks for firms relying on previous exemptions, potentially requiring administrative changes.
The exemption previously allowing firms to rely on ancillary activities without authorization if data was unavailable (Article 4(3)) is being removed, possibly tightening requirements for firms that previously benefited from this provision.
The Treasury make this Order in exercise of the powers conferred by sections 22(1) and (5) and 428(3) of, and paragraph 25 of Schedule 2 to, the Financial Services and Markets Act 2000
The Treasury Ministry issued this statutory instrument using specific powers granted under the Financial Services and Markets Act 2000.
Citation, commencement, extent and interpretation 1.
This section establishes the title, the dates the Order becomes legally effective, where it applies geographically, and definitions used throughout the document.
(1) This Order may be cited as the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2025.
The official short title for this legal instrument is the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2025.
(2) This article and article 2(d) come into force on 10th December 2025.
This specific article and sub-section (d) of Article 2 become active on December 10, 2025.
(3) The remaining provisions of this Order come into force on 1st January 2027.
All other parts of this Order take legal effect on January 1, 2027.
(4) This Order extends to England and Wales, Scotland and Northern Ireland.
The legislation applies across the entire United Kingdom: England, Wales, Scotland, and Northern Ireland.
(5) In this Order, “Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
For interpretative purposes within this document, 'Regulated Activities Order' refers specifically to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
Amendment of the Regulated Activities Order relating to the definition of “investment firm” 2.
Article 2 details the changes made to the existing Regulated Activities Order concerning the scope and definition of an 'investment firm'.
In the Regulated Activities Order, in Part 1 of Schedule 3 (exemptions from the definition of “investment firm”)—
The modification targets Part 1 of Schedule 3 within the Regulated Activities Order, which lists exemptions from being classified as an investment firm.
(a) in paragraph 1(k), for the words from “, considered both individually” to the end, substitute “satisfies either condition in paragraph 1A and paragraph 2 applies”;
Paragraph 1(k) is being updated; the existing clause starting with 'considered both individually' down to its end is replaced with text that directs the reader to check conditions in new paragraph 1A, alongside existing paragraph 2.
(b) after paragraph 1, insert— “1A. The conditions are that— (a)the activity, considered both individually and on an aggregate basis, is an ancillary activity to P's main business when considered on a group basis as determined in accordance with rules made under paragraph 2A(a), or (b)the activity, when considered individually, is below an annual threshold as determined in accordance with rules made under paragraph 2A(b).”;
New paragraph 1A introduces two alternative conditions for receiving an exemption.
Condition (a) relates to the activity being ancillary to the firm's main business on a group basis, as defined by future rules.
Condition (b) relates to the activity falling below an annual monetary threshold, also to be specified by forthcoming rules.
(c) in paragraph 2— (i) in the opening words of sub-paragraph (a), after “P’s main business” insert “, when considered on a group basis,”; (ii) in sub-paragraph (a)(i), after “investment services” insert “, unless the activity referred to in paragraph 1(k)(i) or (ii) is below an annual threshold as determined in accordance with rules made under paragraph 2A”; (iii) in sub-paragraph (c), after “P’s main business” insert “, when considered on a group basis, or below an annual threshold as determined in accordance with rules made under paragraph 2A”;
Paragraph 2 requirements are being amended across several sub-points ((a), (a)(i), and (c)).
These changes incorporate the new terms like 'when considered on a group basis' and reference the new annual threshold criteria established under paragraph 2A, specifically within the context of assessing when an activity is below that threshold.
(d) after paragraph 2, insert— “2A. The FCA may make rules specifying the following for the purposes of determining whether P is excluded from the definition of “investment firm” under paragraph 1(k)— (a)the criteria for establishing when an activity is ancillary to P’s main business on a group basis under paragraph 1A(a), and (b)the annual threshold referred to in paragraph 1A(b) and the criteria for establishing when an activity is below that threshold.”;.
New paragraph 2A grants the Financial Conduct Authority (FCA) the authority to create detailed rules.
These rules will define the criteria used to assess group-level ancillary activities (under 1A(a)) and will specify the actual annual monetary threshold and the rules for determining if an activity falls below it (under 1A(b)).
Consequential amendment to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 3.
Article 3 makes necessary technical changes to separate legislation, specifically the Markets in Financial Instruments Regulations 2017, to align it with the amendments made to the Regulated Activities Order.
In regulation 47 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (reports and applications) in paragraph (1), for sub-paragraph (b) substitute— “(b)report to the FCA the basis on which a person considers an activity— (i)to be ancillary to that person's main business in accordance with the criteria established under paragraph 2A(a) in Part 1 of Schedule 3 to the Regulated Activities Order; or (ii)to be below the annual threshold specified by the FCA as determined in accordance with the criteria established under paragraph 2A(b) in Part 1 of Schedule 3 to the Regulated Activities Order;”.
Regulation 47(1)(b) is replaced to mandate how a person reports their basis for exemption application to the FCA. The report must specify whether the activity qualifies based on the new ancillary criteria (2A(a)) or the new annual threshold criteria (2A(b)) outlined in the Regulated Activities Order.
Consequential amendments relating to the revocation of Commission Delegated Regulation (EU) 2017/592 4.
Article 4 addresses technical amendments within the Regulated Activities Order that are required because a specific piece of EU legislation, Commission Delegated Regulation (EU) 2017/592, is being revoked.
(1) Article 3 of the Regulated Activities Order is amended as follows.
This sub-section indicates that Article 3 of the Regulated Activities Order is about to be modified.
(2) In paragraph (1)— (a) in the definition “investment firm”— (i) in paragraph (a), omit the words from “and with Commission Delegated Regulation (EU) 2017/592” to the end; (ii) in paragraph (b), omit “and with Commission Delegated Regulation (EU) 2017/592”;
In the definition of 'investment firm' within Article 3(1), all explicit references to Commission Delegated Regulation (EU) 2017/592 are removed from paragraphs (a) and (b).
(b) in the definition “qualifying credit institution”, in paragraph (d), omit the words “and with Commission Delegated Regulation (EU) 2017/592” to the end.
In the definition of 'qualifying credit institution' within Article 3(1)(d), text referring to the revoked EU Delegated Regulation is removed.
(3) In paragraph (1A)— (a) in paragraph (a), omit the words from “and with Commission Delegated Regulation (EU) 2017/592” to “business”; (b) in paragraph (b), omit “and with Commission Delegated Regulation (EU) 2017/592”.
In paragraph (1A), text referencing the Delegated Regulation is removed from both paragraphs (a) and (b), ensuring the text aligns with the post-revocation domestic framework.
Christian Wakeford Gen Kitchen Two of the Lords Commissioners of His Majesty's Treasury 17th November 2025
This section records the names of the two Lords Commissioners of His Majesty's Treasury who approved and signed the Order on November 17, 2025.
Explanatory Note (This note is not part of the Order) This Order amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“the Regulated Activities Order”). The Regulated Activities Order specifies certain activities and investments which are to be regulated activities for the purposes of section 22(1) of the Financial Services and Markets Act 2000 (c. 8) (“the Act”). Section 19 of the Act prohibits persons from carrying on any regulated activity in the United Kingdom, unless they are either authorised or exempt.
The Explanatory Note clarifies that the Order modifies the Regulated Activities Order, which defines which activities require financial regulation under the main Act.
Section 19 of the Act generally prohibits unauthorized regulated activities in the UK.
Paragraph 1(k) in Part 1 of Schedule 3 to the Regulated Activities Order excludes persons dealing on their own account or providing investment services in commodity derivatives, emission allowances and derivatives from the definition of “investment firm”. Such persons are not required to be authorised, provided the activities are ancillary to their main business and the relevant exclusion criteria are met. This Order amends the exclusion to allow alternative exclusion criteria to apply.
Paragraph 1(k) currently provides an exemption from being classified as an investment firm for entities dealing in certain derivative products, provided their activities are ancillary to their core business.
This Order changes that exclusion to allow different, alternative criteria to be used.
Article 2 provides two options for assessing whether a person dealing on their own account or providing investment services in commodity derivatives, emission allowances and derivatives is excluded from the definition of “investment firm”. The first option is whether the activity is ancillary to a person’s main business. The second option is whether the activity is below an annual threshold as determined by the Financial Conduct Authority (“the FCA”). Article 2 provides the FCA with a power to make rules to specify the criteria for establishing when an activity is considered to be ancillary to the main business at group level, the annual threshold and the criteria for establishing when an activity is below that threshold.
Article 2 introduces dual pathways for exclusion from the investment firm definition regarding derivatives trading.
A firm can qualify either if its activity is ancillary to its main business, or if the activity falls under an annual threshold.
The FCA is empowered to create the detailed rules for determining both the group ancillary status and the monetary threshold.
Article 3 makes a consequential amendment to regulation 47(1)(b) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701). The FCA can direct the manner in which a person reports to the FCA either in relation to activities that are ancillary to the person’s main business or in relation to activities that are below the annual threshold.
Article 3 updates the reporting requirements within the 2017 MIFID Regulations.
It ensures that the method by which a person reports their exemption claim to the FCA reflects the new options: ancillary status or falling below the threshold.
The amendments made by this Order supersede provision made by the following legislation, which will consequently be revoked under section 1 of the Financial Services and Markets Act 2023 (c. 29) and The Financial Services and Markets Act 2023 (Commencement No. 11 and Saving Provisions) Regulations 2025 (S.I. 2025/1078) on 1st January 2027— (a)paragraph 19 of Schedule 3 to Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (this provision gives the FCA a power to make technical standards to specify the criteria for establishing when an activity is considered to be ancillary to a person’s main business); (b)Commission Delegated Regulation (EU) 2017/592 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the criteria to establish when an activity is considered to be ancillary to the main business (“the Delegated Regulation”); and (c)Article 72J(1)(a) and (b) of the Regulated Activities Order and relevant definitions (these provisions enable persons seeking to rely on the ancillary activities exemption to carry on their business without authorisation if there is no data available to enable them to perform the test establishing when an activity is ancillary).
This section explains that the changes replace specific provisions from retained EU law, notably MiFIR (Regulation (EU) No 600/2014) and the Delegated Regulation (EU) 2017/592, effective January 1, 2027.
Critically, it notes the removal of transitional arrangements that previously allowed reliance on the ancillary test even when necessary data was unavailable.
Article 4 makes other consequential amendments to the Regulated Activities Order that are necessary as a result of the revocation of the Delegated Regulation.
Article 4 covers miscellaneous clean-up amendments to the Regulated Activities Order needed because the previously mentioned Delegated Regulation is being legally revoked.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
The Treasury states that a complete Regulatory Impact Assessment was not required because the changes are not expected to cause significant impacts on the private, voluntary, or public sectors.