Structured Products Bulletin: Q3 2025

World affairs continued to shake global financial markets in the third quarter of 2025. Although stock market indices are trading at record highs, prices are volatile, inflation remains stubbornly high and international relations appear to be at historic lows. Excitement over new growth areas such as digital assets and artificial intelligence is tempered by political polarisation, geopolitical tensions, trade conflicts and cyber attacks. Many climate initiatives are quietly being shelved, and businesses less vocal about their environmental efforts (so-called greenhushing). Nevertheless, climate concerns are increasing and catastrophe bond issuances are steadily growing.

The EU Competitiveness Compass initiatives from the European Commission continue apace. The EU Savings and Investments Union component has seen ESMA conduct several market consultations on market integration. On 10 September 2025, the European Parliament passed a resolution lamenting the shortcomings of the EU economy (following the Letta and Draghi reports) and encouraging regulatory initiatives to reduce market fragmentation and increase retail participation in EU capital markets. Many of the EU’s concerns mirror those of the UK, so there are strong parallels in their initiatives even though they are not exactly the same.

In the UK, much work is being expended on new regulations to replace the assimilated EU financial regulations. In her Mansion House speech on 15 July 2025, Rachel Reeves made it clear that the financial services sector is a major focus of her reforms. The reforms include encouraging new listings on the London Stock Exchange, especially shares, relaxations to some of the regulatory capital requirements and encouraging retail investments.

We are pleased to set out our third quarter of 2025 update covering legal and regulatory developments affecting structured products below.

EU

EU Retail Investment Strategy (RIS)

Retail Investment Strategy - new provisional agreements reached

The EU Retail Investment Strategy (RIS) was originally announced in 2023. It involves an omnibus package of amendments to several items of EU legislation, and there have been extensive negotiations on specific aspects.

On 23 September 2025, it was reported that agreement had been reached on certain aspects aimed at increasing citizen participation in EU capital markets, including supervisory convergence and client categorisation as professional, though no final publications have been released. Negotiations are scheduled to resume in October 2025.

For more information and insights about the EU RIS, see the Simmons & Simmons hub page and the specific page about the ongoing trilogues.

EU Savings and Investment Union / Capital Markets Union

European Parliament resolution on facilitating the financing of investments and reforms to boost European competitiveness

One year after the Draghi report on European Competitiveness (and numerous efforts to bolster the EU Capital Markets Union and create the EU Savings and Investments Union – through integrating capital markets and channelling investments into savings), the European Parliament (EP) passed a Resolution on 10 September 2025 which calls on the European Council to speed up the adoption of remaining legislation. It is an EP “own-initiative report”. The Resolution acknowledges the significant uncertainty created in global markets by the geopolitical tensions, trade conflicts and tariff disputes, which have significantly increased financial market volatility. The EP notes the lack of progress in integrating EU financial markets which remain fragmented, and notes that retail investor participation in capital markets would be improved by the prospect of higher investment returns, greater efficiency, and better value.

The EP calls for the Commission to prioritise an ambitious Savings and Investment Union agenda. In terms of specific actions, the EP calls for pragmatic implementation of the Listing Act, the development of proposals to support the relocation of clearing activities to the EU, looks forward to the ambitious delegated act on active accounts under EMIR, the strengthening of the trading and post-trading ecosystem, welcomes the shortening of the settlement cycle from T+2 to T+1, the streamlining of the sustainability finance framework, calls for a review of the ancillary activity exemption to enable non-financial companies to trade on energy derivatives markets, and calls on the Commission to develop proposals aimed at channeling savings to investment products such as non-complex products and other offerings (amongst other areas). A mid-term review of the SIU will be published by Q2 2027.

EU Economic and Financial Affairs Council (ECOFIN)

Economic Dialogue with the President of ECOFIN

Denmark currently holds the presidency of the Council of the EU for six months. On 24 September 2025, the Danish minister Stephanie Lose who is acting as president presented a detailed economic dialogue setting out the main items of focus. Among other things, these include advancing negotiations on the EU Retail Investment Strategy, prioritising work on the EU Savings and Investment Union, reducing burdens on business and improving European competitiveness.

MiFIR

European Commission (EC) consults on changes to MiFIR Delegated Regulation

From 8 August 2025 to 5 September 2025, the EC consulted on proposed changes to Commission Delegated Regulation (EU) 2017/567 (the MiFIR Delegated Regulation). The changes cover the determination of liquid markets for equity instruments and post-trade risk reduction services, as well as removing redundant provisions. In particular:

• The determination of what constitutes a “liquid market” replaces the existing free float criterion with a new market capitalisation criterion, along with other clarificatory changes for liquidity assessment for equity instruments.
• Provisions on what constitutes a “reasonable commercial basis” for trading venues and systematic internalisers are deleted as ESMA will now have the power to determine them.
• As pre-trade transparency requirements for systematic internalisers for non-equity instruments have been deleted, the associated provisions specifying the relevant instrument sizes will be deleted.
• Provisions clarifying what constitutes post-trade risk reduction (PTRR) services for the purposes of the Article 31(1) MiFIR exemption.
• Publication requirements for portfolio compression services will be deleted as investment firms and market operators who provide portfolio compression services are obliged to make details public through an approved publication arrangement.

The changes are expected to be implemented by the passing of a new Commission Delegated Regulation in Q4 2025.

Financial Crime and Anti-money laundering

AMLA commences operations and agrees MoUs with ESAs and ECB

The EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) commenced operations on 1 July 2025. This is part of the wider anti-money laundering (AML) and counter-terrorist financing (CTF) package agreed in 2024, though it will not be fully operational until 2028.

The European Banking Authority (EBA) published a memorandum of understanding (MoU) dated 27 June 2025, entered into by the European Supervisory Authorities (the ESAs, which comprise the EBA, ESMA and EIOPA) with AMLA. The MoU aims to promote supervisory convergence throughout the EU financial services sector, providing a framework that will enable the ESAs and AMLA to co-operate and exchange information with one another and co-operate in practice to perform their respective tasks in an efficient, effective and timely manner.

Similarly, the European Central Bank (ECB) published a separate MoU dated 27 June 2025 with AMLA. As well as overseeing the financial and non-financial sectors as a whole, AMLA will directly supervise a group of financial institutions particularly exposed to cross-border money laundering risks (referred to as "selected obliged entities"). These include payment institutions, cryptoasset service providers (CASPs) and, in some cases, banks that also fall under the ECB's prudential supervision. The ECB incorporates AML and CTF considerations into its prudential supervision of banks.

These MoUs are part of the overall co-operation framework AMLA is required to establish in relation to the financial sector. They are important components of the EU institutional arrangements going forward.

In a related press release, Bruna Szego, AMLA Chair, explains that close co-operation between AML and CTF supervisors and prudential supervisors is essential to build a robust and consistent AML and CTF framework across the EU.

Environmental, social and governance (ESG)

ESMA principles for fair, clear and not misleading sustainability-related claims

On 1 July 2025, ESMA published thematic notes setting out four principles to address concerns around greenwashing – that sustainability claims are accurate, accessible, substantiated and up-to-date. While not legally binding, these principles apply to issuers of structured products and should be considered when drafting prospectuses, registration documents and other issuance documents.

A high-level summary of the 4 principles are:

• Accurate: sustainability claims should fairly and accurately represent an entity’s and/or a financial product’s sustainability profile, without exaggeration and consistently across all communications. Claims should be precise. Omissions and cherry picking should be avoided.
• Accessible: sustainability claims should be based on information that is easy to access and easy to browse through by readers and at an appropriate level of detail so they are understandable. Avoid oversimplification yet make them easy to understand.
• Substantiated: sustainability claims should be substantiated with clear and credible reasoning, facts and processes. Substantiation methodologies (e.g. comparisons, thresholds or underlying assumptions) should be fair, proportionate and meaningful.
• Up-to-date: sustainability claims should be based on information that is up-to-date. Any material change should be disclosed in a timely manner. Specifying the date and perimeter of any analysis could be useful.

Examples of good and bad practices are also set out in the thematic notes.

Central Securities Depository Regulation (CSDR)

European Parliament adopts text for T+1 settlement implementation

The European Parliament has adopted the legislative resolution to amend the CSDR to implement the T+1 settlement cycle from 11 October 2027. This will affect settlement of structured products trading on EU trading venues.

UK

UK Prospectus regime

FCA Policy Statement 25/9 – New Rules for the POATRs Regime

The FCA has published Policy Statement 25/9 (PS25/9) containing Final Rules to accompany the new Public Offers and Admissions to Trading Regulations (POATRs), comprising (amongst other things) the UK’s new prospectus regime, replacing the EU-derived Prospectus Regulation from 19 January 2026. This was one of the key announcements in the Chancellor’s Mansion House Speech in July 2025.

PS25/9 sets out the FCA’s final Rules having consulted on aspects of the new regime in earlier consultation papers including: the new POATRs regime (CP24/12), the new public offers platform (CP 24/13) and debt offerings to retail investors (CP25/2). The changes have a bigger impact on equity issuances than on debt, but some headlines for debt capital markets/structured products include:

• The new Prospectus Rules: Admission to Trading on a Regulated Market Sourcebook (PRM, plus Annexes) replaces the existing Prospectus Regulation Rules (PRR) Sourcebook (aspects of the UK Listing Rules (UKLR Sourcebook) and MAR rules for MTFs are also amended, with effect from 19 January 2026). The Annexes to the Policy Statement set out the details of the rule-changes;
• The FCA is sticking closely to current UK Prospectus Regulation (UKPR) requirements (including in relation to prospectus content and format), but some key headlines for debt issuers (including structured products) include:
  • Forward incorporation of historical financial information will be permitted in a base prospectus without the need to publish a supplement – guidance on including “evergreen” language in prospectuses (to refresh statements that may be impacted by forward-incorporated information) will be consulted on at a later date;
  • More flexibility in supplements (than under the EU regime) – an issuer will be allowed to use a supplement to amend conditions in a base prospectus such that it amounts to the introduction of new products, subject to certain conditions:
    • There can be no open offer or securities with a pending application for admission to trading on a regulated market;
    • Amendments can only be made to securities note information and not registration statement information;
    • Changes to Terms & Conditions via a supplementary prospectus (of securities that may already be issued) are restricted unless:
      • The securities remain fungible with securities that could have been issued prior to the change, and if not:
      • They are not asset-backed securities or “derivative securities” (securities linked to an underlying asset); and
      • The supplementary prospectus must include the minimum information required by the relevant securities note annex.
  • An increased threshold at which a prospectus is required for further issuances of fungible transferable securities, from 20% to 75% (with the option for debt issuers of using a simplified prospectus removed – they will have to produce a standard securities note) – further guidance on fungibility assessments will be issued;
  • Protected forward-looking statements – an alleviated liability regime (although this has limited uses for debt securities) – further guidance on this will be issued later in 2025;
  • Requirements for Primary MTFs that do not meet the “qualified investor condition”, so an MTF admission prospectus will be required with the market operator setting the conditions for this (this is not expected to affect issuances on the International Securities Market due to its qualified investor condition);
  • Sustainability – no mandatory disclosures, except that where an issuer states whether the bonds have been marketed as green, social or sustainable and/or issued under an ESG framework it must include a statement to that effect in the prospectus, plus there will be voluntary disclosure only of relevant information (further guidance on this will follow);
  • Prospectus timing – where an offer of securities is made to the public in reliance on the “offer conditional on admission” exemption, the prospectus must be made available before the end of the offer period; in all other cases, it should be made available at a reasonable time in advance of the admission to trading;
  • Removing UKLR requirements for Listing Particulars as they are redundant as a listing document type under the new rules (with new transitional provisions included for Listing Particulars approved before 19 January 2026 and for securities already listed and admitted to trading on the Professional Securities Market);
  • Certain Islamic Finance instruments backed by a sovereign or central bank are exempt from the PRM rules; and
  • Introducing a single disclosure framework for debt securities (no distinction between wholesale and retail), based on the wholesale regime with additional alleviations for “seasoned” UK listed corporates issuing simple, standardised, unsubordinated, unsecured corporate bonds to retail and wholesale. As with the current regime, the regime retains additional disclosure requirements in the PRM Annexes for securities with more complex features such as asset-backed securities and securities with derivative features – further guidance in the Product Governance Sourcebook (PROD) will clarify the types of bonds (now called “plain vanilla listed bonds”) the FCA deems suitable for the mass market.

The new POATRs will take effect once the existing UK PR has been repealed under a FSMA Commencement Order, to coincide with the new FCA Rules taking effect from 19 January 2026.

UK Public Offers Platform

FCA Policy Statement 25/10 – Final Rules for Public Offer Platforms

In addition to FCA Policy Statement 25/9 mentioned above, the FCA has also published Policy Statement 25/10 which sets out the new rules for operators of Public Offer Platforms (POPs). POPs are a new type of electronic issuance platform designed for small businesses to raise capital without needing a prospectus. The rules set out a new regulated activity of operating a POP.

POPs are aimed at issuers who want to make public offers of securities that are not admitted to trading on a regulated market or a multilateral trading facility (MTF). POP operators are treated as “gatekeepers” for public offers and issuers and must secure an appropriate degree of protection for investors (which can be retail). Obligations on POP operators and other key aspects of the rules include:

• Minimum due diligence at an information gathering stage. This includes key individuals, business model, key risk factors and financial information.
• Post-information gathering due diligence needs to be materially complete and not include any material inconsistences.
• A financial viability assessment is required (a “reasonable assessment” of the issuer and its financial position).
• Determination of whether it is appropriate to facilitate a public offer.
• Making available a disclosure summary.
• Material changes to information and withdrawal rights.
• Systems and controls.

Financial promotion rules apply and there are no on-going disclosure requirements once the offer has closed. Investors bear all risks, though there may be redress against POP operators in some circumstances. There is no bespoke liability regime, but investors could make claims for misleading statements and impressions under ss. 89 and 90 of the Financial Services Act 2012.

These new rules are largely aimed at crowdfunding platforms, though corporate finance firms are explicitly mentioned and structured products issuers may want to consider whether to use or operate a POP for their issuances.

FCA Handbook

FCA’s new Handbook launch

The FCA has launched its new Handbook, which is part of its strategy to be a “smarter regulator”. The Handbook’s structure and format remains broadly the same but the look and feel is slightly different and navigation is supposedly easier, with links included to legal instruments and related parts of the Handbook – see the FCA’s Handbook Navigation Guide. The legacy version of the Handbook will remain available for a short period. The specific Sourcebooks relevant for structured products (e.g. UKLRs, DTR, COBS, DEPP) are available in the new format.

UK MiFID Org Regulation

Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 published in final form

The Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 (SI 2025/1020) have been published in final form together with a draft explanatory memorandum. These Regulations will reform the UK MiFID Org Regulation, which is the UK’s onshored and assimilated version of Commission Delegated Regulation (EU) 2017/565.

The UK MiFID Org Regulation sets out the organisational and operating requirements for investment firms, as well as detailed regulatory requirements including conduct rules and systems and controls obligations. The wide scope of rules covers requirements including client categorisation, best execution, research, conflicts of interest, outsourcing, compliance and internal audit functions. The new Regulations will revoke firm-facing provisions in the UK MiFID Org Regulation that are to be delegated to the FCA and PRA and replace and restate key definitions from the MiFID Org Regulation in UK financial services legislation under the “FSMA model” of regulatory framework established by the Financial Services and Markets Act 2023. As part of the new regulatory framework, the FCA and PRA have consulted on new rules to replace the firm-facing provisions of the UK MiFID Org Regulation, which will be set out in final form in Policy Statements in H2 2025 and will take effect when HM Treasury revokes the existing UK MiFID Org Regulation under FSMA 2023. These changes may well affect structured products, but the details will not be known until the FCA/PRA Policy Statements are published.

Case Law

High Court provides clarity on English jurisdiction clause in 1992 ISDA Master Agreement

In Dexia SA v Comune di Torino [2025] EWHC 1903, the English High Court provided clarity on the construction of the English jurisdiction clause in an English law 1992 ISDA Master Agreement (MA). That clause (in section 13(2)) is drafted by reference to a UK statutory definition of “Contracting State” (in the Civil Jurisdiction and Judgments Act 1982 (CJJA)), the definition of which has changed over time – including as a result of Brexit, and more recently, with the UK’s accession to the Hague Convention 2019. The High Court ruled that where the MA is expressed to be governed by English law, section 13(2) is a non-exclusive jurisdiction clause, except where a matter involves a “Contracting State” court, in which case it is an exclusive jurisdiction clause. English courts now have jurisdiction to hear the €400 million dispute over the validity of a series of interest rate swap transactions entered into by Italian municipality Comune di Torino with Dexia to hedge its interest rate exposure and reduce its indebtedness under long term variable rate bonds. Torino was seeking (in Italian courts) to void the swap transactions under Italian law and claim damages for various breaches, but its arguments that section 13(2) should be interpreted narrowly so as to exclude matters of public finance from its scope, and that Italy was not a “Contracting State” because, since Brexit, the Conventions which were previously referred to by the CJJA – namely Brussels and Lugano – no longer applied as between Italy and the UK, were rejected.

Cryptoassets

New UK rules for cryptoasset service providers – FMLC Response

Earlier in 2025, draft legislation in The Financial Services and Markets Act 2023 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 and accompanying proposed FCA Rules in Consultation Paper 25/14 set out the future UK regulatory regime for stablecoins and cryptoassets. The draft legislation will, when finalised, establish new UK regulated activities relating to ‘qualifying cryptoassets’ and ‘qualifying stablecoin’, which will become ‘specified investments’ under FSMA 2000. The proposed new regulated activities include: issuing ‘qualifying’ stablecoin; the safeguarding of qualifying cryptoassets; and operating a qualifying cryptoasset trading platform. The new FCA Rules will establish a new CRYPTO chapter of the FCA Handbook together with amendments to the Client Assets (CASS) Sourcebook, which establish rules and guidance for the activities of issuing a qualifying stablecoin and safeguarding qualifying cryptoassets, including qualifying stablecoins.

The response of the Financial Markets Law Committee (FMLC) to CP25/14 sets out various concerns around the scope of the regime and the drafting of the new legislation, including uncertainty around the entities and activities intended to be in scope, a lack of detail around how the transition from a non-systemic to a systemic stablecoin would take place and over what timeframe, disagrees that qualifying stablecoin issuers should have flexibility to hold backing assets for the benefit of qualifying stablecoin holders using a wider range of solutions than the one-size-fits-all statutory trust as proposed, and provides input to the FCA’s request for views on how stablecoins (and the relevant contractual obligations) can be transferred to another holder (by way of assignment, novation or deed poll). Other comments are included around the concepts of safeguarding and custody, with the FMLC suggesting various proposed amendments to the FCA’s draft Rules.

FCA allows access to crypto ETNs for retail consumers

The FCA has announced that retail consumers will regain access to crypto exchange traded notes (cETNs) from 8 October 2025, reversing the January 2021 ban on the products. cETNs will need to be traded on FCA-approved, UK-based recognised investment exchanges, and financial promotion rules will be enforced to ensure that consumers receive appropriate information and are not attracted by unsuitable investment incentives. The Consumer Duty will apply to firms offering these products to consumers, but there will not be any coverage for consumers under the Financial Services Compensation Scheme. Minor amendments to various aspects of the FCA Handbook will take effect from 8 October 2025 to incorporate the rule-change.

Further to the lifting of the ban, the FCA has updated its listing applications page to confirm that it will begin to accept submissions for the review of retail crypto ETN programmes from 25 September 2025. All applications received on 25 September 2025 will be treated as having been received at the same time. Applications should not be submitted before 25 September 2025 as they cannot be allocated. All applications must be made via the FCA’s electronic submission system and must be substantially complete, including the requisite supporting documentation.

FCA consults on application of FCA Handbook for cryptoasset activities

The FCA has published Consultation Paper 25/25 (CP25/25) on the application of the FCA Handbook for regulated cryptoasset activities.

In CP25/25, the FCA consults on:

• The application of its rules relating to high-level standards, supervision, systems and controls, and business standards to cryptoasset firms.
• Draft non-Handbook guidance on how cryptoasset firms should comply with its operational resilience requirements.

CP25/25 also contains two discussion chapters that seek views on the FCA's initial approach on issues including the application of the consumer duty, COBS and PROD to cryptoasset firms, and the availability of the Financial Ombudsman Service for the customers of these firms. Appendix 1 to CP25/25 contains a draft FCA Handbook instrument relating to the consultation: the Cryptoassets: Conduct and Firm Standards Instrument 202X.

The deadline for responses to the consultation chapters is 12 November 2025 and the deadline for responses to the discussion chapters is 15 October 2025. The FCA intends to consult on the issues raised in the discussion chapters later in 2025.

Law Reform

Possible reform of the law of Deeds

The Law Commission has announced its latest programme of law reform to modernise and simplify the law in various areas. In terms of relevance to financial markets, this latest (14th) round of law reform includes potential reform of the law of deeds. The project will consider the merits of R (Mercury Tax Group Ltd) v Her Majesty’s Commissioners of Revenue and Customs [2008] EWHC 2721 (Admin) and assess whether certain deed requirements should be amended or removed, taking into account: the effectiveness of deeds, including whether the concept of a deed is fit for purpose; the existing requirements for deeds (including witnessing, attestation and delivery); and whether amendments are needed to the law of deeds to ensure that their compliance requirements can be facilitated by smart contracts. The timetable for each aspect of law reform is to be released “in due course”. Further information will be shared once it becomes available and may well affect deeds used in structured products issuances.

Money Laundering Regulations

HM Treasury policy note and draft SI on amendments to the Money Laundering Regulations

HMT published a draft statutory instrument and policy note on amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLRs) and opened a technical consultation. This follows its consultation response to its March 2024 consultation paper on improving the effectiveness of the MLRs.

HM Treasury invites feedback on the practical operability, clarity and effectiveness of the draft provisions in the SI. The policy note summarises the main measures together with their policy intent. It groups the measures according to the chapter of the consultation response in which they were set out, including:

• Enhanced due diligence on complex transactions and high-risk third countries, and due diligence in pooled client accounts and triggers for certain non-financial firms.
• Customer onboarding in bank insolvency scenarios and information sharing between supervisors and other public bodies.
• Registration and change of control for cryptoasset service providers.

The consultation closed on 30 September 2025. The final SI is expected to be laid in early 2026 and come into force 21 days later. Specific provisions for cryptoasset businesses will be aligned with the commencement of the cryptoasset perimeter under FSMA 2000.

Consumer Duty

FCA Feedback Statement on Consumer Duty: Action and Review

Feedback Statement FS25/2 dated March 2025 sets out the FCA’s programme of action to simplify Consumer Duty requirements. This includes:

• A mortgage rule review. A Discussion Paper was published on this in June 2025 and the deadline for responses was 19 September 2025.
• Reviewing the international application of conduct rules in the insurance sector in particular, as well as more broadly. Consultation Paper CP25/12 on simplifying insurance rules was published on 14 May 2025 and the consultation closed on 2 July 2025.
• Ensuring consistency in definitions.
• Continuing ongoing work in related areas (e.g. review of the Senior Managers & Certification Regime, discussion in MiFID Org Regulation consultation, review of assimilated law).

An update on 30 September 2025 pushed back expected timings, with further FCA reports expected in Q4 2025 and in 2026.

These reviews may affect structured products sold to retail investors, though the impact is unlikely to be substantial.

T+1 Settlement

UK Accelerated Settlement Taskforce (AST) publishes addendum and erratum to report

In September 2025, the AST published an updated version of the plan to implement T+1 in the UK, updating the initial plan from February 2025 with an addendum and erratum. The initial report recommends T+1 for UK cash settlement should apply from 11 October 2027. One substantive update is an additional recommendation for FX participants to work with custodians and providers to manage partial settlements and funding decisions to reduce settlement risk.

Trade Association Updates

International Swaps and Derivatives Association (ISDA)

Strengthening DC Governance

Following the market consultation about the structure, formation and governance of the Credit Derivatives Determination Committees (each a DC), on 22 July 2025 a new Charter was published and the DC Rules updated accordingly.

The Charter establishes a new Credit Derivatives Governance Committee comprised of business experts (as opposed to legal) that considers market feedback and adopts rule changes affecting the structure and operations of the DCs to ensure their long-term viability and efficiency and transparency. However, it does not participate in the actual decisions to ensure proper separation of the determinations process from the procedure setting the framework and operations of the DCs. The explanatory statement is available.

For structured products, this is likely to affect disclosures in credit linked notes and other relevant synthetic risk transfer products.

Credit Derivatives Proposal to Address Lock-up Agreements for CDS Auctions

On 3 July 2025, ISDA published a proposal for handling lock-up agreements in credit default swap (CDS) settlement auctions. In many debt restructurings, debtholders enter into lock-up agreements before the restructurings are effected, which can greatly reduce the debt available for settlement in CDS auctions and thereby affect auction final prices. The proposal will require auction participants to state whether they are subject to lock-up agreements and allow locked-up bonds to be delivered, matching locked-up deliverers with locked-up recipients where possible. If there is a break in the chain (e.g. if locked-up bonds are delivered and the ultimate recipient is not locked-up) then cash settlement applies to that step.

When implemented, this change may necessitate amendments to disclosures in credit linked notes and other relevant synthetic risk transfer products, and could affect any hedging arrangements.

Global Financial Markets Association (GFMA)

Report on The Impact of Distributed Ledger Technology (DLT) in Capital Markets: Ready for Adoption, Time to Act

This Report highlights the transformative potential of DLT in capital markets, reshaping securities issuance, collateral management and fund operations. In particular, live cases demonstrate significant efficiency gains, enhanced transparency and improved risk management, which renders many of the premises underlying the Basel Committee on Banking Supervision’s forthcoming capital standards for cryptoassets out of date. In conjunction with several other industry associations including AFME, SIFMA and ISDA, GFMA has also published a Joint Letter to the Basel Committee calling for it to pause the rollout of the cryptoasset prudential standards and for a recalibration of the standards, warning that the proposed Cryptoasset Exposures Standard (SCO60) which is due to take effect in January 2026, imposes “excessively conservative and overly punitive” capital requirements that are misaligned with the actual risks. This report sets out useful considerations for structured products issuers considering tokenising issuances.

For further information on any of the topics covered in this Bulletin, please contact the authors, or your usual Simmons & Simmons structured products contact.