Author: Sybille Mueller, Director and Andrew Dunn, Practice Lead, Streets Consulting
2026 is shaping up to be the year of infrastructure – either upgrading it or defining it. It’s going to be about the hard yards of implementation, the plumbing of our markets, and the regulatory frameworks that will define the next decade.
From our vantage point here in London, and looking to Europe and the US, the themes for the year ahead are clear. Regulation, technology and trading dynamics are driving market structure changes, and while we are seeing a distinct shift towards sophisticated integration of AI-driven capabilities, we are also witnessing significant infrastructure modernisation to build out the technology infrastructure and resilience that will underpin markets in future.
Post-trade transformation and the transition to T+1 settlement in the UK and Europe will dominate technology agendas as the industry needs to reduce post-trade processing times by over 80%. We’ll take a closer look at this and the latest on the efforts to develop three Consolidated Tapes in Europe.
Retail participation and 24/7 trading are on the rise, placing technology demands on venue and infrastructure operators, with market participants questioning overall readiness for the move.
Digital asset regulation and the path towards tokenization of assets are moving ahead at speed, with institutional participation expected in earnest once regulatory guardrails are in place. Ian Stirling, our Deputy CEO, has looked into the digital assets space in a separate blog, so we won’t be delving into that space too deeply in this piece.
And, of course, the geopolitical context will continue to drive volatility, impacting market behaviour globally and shaping new alliances, as well as trading and investing behaviours.
Here is what we expect to shape the Fintech and financial markets landscape over the coming months.
The Good News Up Front: Global Fintech Investment is Recovering
The investment landscape has settled in the UK, whilst Fintech funding globally rose more than 20% to around $53bn globally. The “Innovate Finance Investment Landscape” report released earlier this month confirms what a lot of the market suspected: 2025 was a flat year for Fintech funding in the UK, but the bleeding of prior years has stopped. UK Fintechs raised $3.6bn in 2025, effectively level with 2024’s figures.
The UK has therefore regained its spot as the clear global runner-up to the US ($25.1bn), just about holding off a surging India ($3.4bn) and the UAE ($2.5bn). Binance’s decision to raise $2.0bn in the UAE massively skews the figures here, catapulting the region into the top 5 for the first time, whilst Singapore rounds out the top five ($2.0bn).
However, the cheque books are not open for everyone. Investors have retreated to safety. The money is flowing into financial infrastructure and payments (the rails that the global economy runs on) rather than consumer-facing apps with questionable unit economics. We are seeing a flight to quality where only those with robust paths to profitability are securing Series B+ rounds.
What’s more, fintech M&A activity is on the rise. Deal flow is driven by several factors: tougher fundraising and lower valuations are pushing many private fintechs to sell or merge rather than continue raising equity at down‑round prices, while traditional banks and large institutions are using acquisitions to modernise payments infrastructure, add AI and data analytics capabilities, and expand geographically.
The Integration of AI into the Financial Market Workflows
Only a year ago, AI was merely edging into production workflows across the front, middle, and back office. Today, firms across the ecosystem are piloting AI tools (and agents!) and scaling them, but with traceability, explainability, and internal governance models needed for a regulated industry. Adoption varies widely, and the buy-vs-build debate rages on; decisions on whether or not to build AI capabilities or in-source them often depend on internal expertise, data sensitivity, regulatory requirements, and speed-to-market needs. But as AI permeates business operations, data governance has emerged as a critical foundation, driving increased emphasis on data ownership, internal standards, and usage controls. There is also growing recognition that AI and physical infrastructure are deeply intertwined. Performance and resilience now depend as much on compute, cloud architecture, data centres, and energy grids as on networks and algorithms.
In terms of regulation, the focus seems to have shifted away from static compliance toward live supervision and continuous assurance, prioritising resilience and controllability in real-world conditions.
Firms are expected to inventory AI systems and evidence end-to-end governance in live environments. In the EU, using AI in trading triggered requirements for explainability, validation, auditability, and supervisory oversight. The UK adopted a more pragmatic approach through test and learn sandboxes and live supervisory engagement. Singapore went further, embedding AI risk into formal lifecycle governance, board accountability, and operational-resilience frameworks, explicitly treating AI as an operational risk rather than a pure model-risk issue.
Finally, the EU AI Act is fully in force, and the deadline for complying with rules on High-Risk AI Systems is 2 August 2026. Firms must be able to prove the provenance and governance of the data feeding their AIs. In other words, firms cannot feed a ‘black box’ with unknown ingredients and expect the regulator to accept the output.
And news just in at the end of January: the FCA has just launched a review into the implications of advanced AI on consumers, retail financial markets and regulators. It states that ‘by taking a forward-looking view, the review will help the FCA continue to support innovation while promoting the safe and trusted adoption of AI in retail financial services’.
Additional regulatory updates are in our January ‘Eye on AI’ section of the newsletter.
The Importance of High-Quality Data to Fuel an AI-Driven Future
Perhaps the most significant shift in 2026 is the attitude towards data as we witness an explosion of AI applications across the trading lifecycle and the increasing use of Agentic AI. High-quality market data (accurate, timely, standardised, and comprehensive) is increasingly viewed as a critical foundation for AI across financial use cases, from risk models and algorithmic trading to compliance and consumer finance. Data integrity and trust are essential for AI outputs to be reliable; poor data leads to poor model performance and elevated risk of bias, errors, and model failure. In other words, poor data no longer just ruins a chart; it now wreaks havoc on automated workflows and credibility. As a result, the industry is calling for better data standards, governance, and transparency to build data trust in financial systems.
Modernising the Plumbing of the Markets
Significant MiFID amendments came into force across the UK and Europe in 2025. Measures such as a single volume cap on dark trading, stronger pre-trade transparency for systematic internalisers, and streamlined post-trade reporting are expected to reshape liquidity and market structure, with clearer effects anticipated in 2026.
T+1 is looming large over European market participants
They watched the US transition successfully in May 2024, and now all eyes are on the UK and EU target date of 11 October 2027. Those who invest early and modernise will get ahead and define the next generation of post-trade infrastructure. But the challenge is structural: T+1 is much more complex than in the US, given the currency and regulatory patchwork. US firms increased headcount by up to 18% to support the move to T+1, and they were working within a landscape of only a few, mostly centralised infrastructures. Europe is significantly more complex, with more than 30 central securities depositories, different technology stacks and rules.
In Europe, the Consolidated Tapes are advancing
Consolidated tape initiatives are advancing, but the UK and EU are at different stages.
In the UK, the FCA is consulting on a framework for a UK equity consolidated tape (CP25/31), and the consultation closes on 13 February 2026. FCA documentation indicates it is measuring success, in part, by an equity consolidated tape operating during the course of 2027 following procurement and authorisation of a chosen consolidated tape provider. For UK bonds, the FCA has now appointed Etrading Software as the CT provider, which is expected to go live on 22 June 2026.
In the EU, ESMA has selected EuroCTP as the first consolidated tape provider for shares and ETFs (December 2025) and selected Ediphy (fairCT) as the first consolidated tape provider for bonds (July 2025), in each case inviting the selected entity to apply for authorisation. ESMA has also launched the first selection procedure for a consolidated tape provider for OTC derivatives, with requests to participate due by 11 February 2026 and an ESMA decision intended by early July 2026. In parallel, ESMA has stated that the new rules in its MiFIR Review final report on derivatives transparency and the OTC derivatives tape are expected to start applying on 1 March 2027.
Globally, We Are Seeing the Gradual Move Towards 24/7 Trading
This is placing significant operational demands on venue operators as regulators, exchanges, and brokers intensify efforts to make trading more accessible, cost-efficient, and engaging for individual investors.
Retail investor expectations are increasing. In particular, younger and mobile‑first investors, who are used to trading crypto at any time, now want similar flexibility for equities and ETFs, including the ability to trade before/after work and during local waking hours. At the same time, international institutions want to manage global portfolios in real time and avoid being stuck overnight when big news hits.
Estimates suggest that retail investors now make up approximately 30% of daily US equity trading volume. In Europe, we are set for a landmark change in June 2026 with the EU-wide ban on payment for order flow. This could be a very positive step for investors, encouraging greater execution of retail order flow directly on multilateral trading venues.
The latest exchanges to make a move are CBOE, which announced plans for 24×5 equities trading in early 2025, and Nasdaq, which filed its 23/5 proposal with the SEC in December, targeting a second-half 2026 launch. The blocker remains the banking system. Until settlement and liquidity can move freely on weekends, true 24/7 trading will remain the preserve of tokenised assets.
Under the Roof of the Fixed Income Market, Major Renovations are Underway
In the US, the SEC adopted central clearing rules back in December 2023, requiring covered clearing agencies to centrally clear eligible secondary market transactions in US Treasury securities. With compliance dates extended to 31 December 2026 for cash market transactions and 30 June 2027 for repo transactions, the industry is now in the critical implementation phase. This represents the most significant structural change to the Treasury market in decades, potentially requiring as much as $4 trillion in additional daily transactions to be centrally cleared.
Alternative Trading Systems (ATS) are Becoming More Popular
In the US, off-exchange trading surpassed the 50% mark in the final quarter of 2024, with approximately 11-12% of US equity trading occurring through ATSs.
Several factors are driving the rise in ATS platforms, including better liquidity and better execution during market hours, cheaper access fees and rebates to more flexible fee structures, reduced market impact and information leakage, and the ability to trade large order sizes in dark pools. Overnight sessions are also increasing in popularity as traders can manage their risk in real-time, rather than waiting for the market to open at 9:30 AM.
Despite their rapid expansion, dark pools and ATSs have come under heightened regulatory scrutiny. The U.S. Securities and Exchange Commission (SEC) has expressed concerns about limited transparency on these platforms, particularly with respect to price discovery and the potential for adverse effects on retail investors.
The Geopolitical Context: New Alliances or Old Blocs?
As numerous fintech funding and investment reports indicate, the concept of UK and European Sovereignty is emerging. We see an increased focus on reducing reliance on US technology stacks and infrastructure, and portfolio weightings shift away from the US towards Europe. To add to this, Middle Eastern and Asian investors are actively diversifying away from US exposure, positioning European and UK managers as key beneficiaries of this shift.
Closer to home, the regulatory divergence between the UK and the EU is becoming sharper and more defined.
The UK is pressing ahead with its competitiveness agenda through the ongoing implementation of the Edinburgh Reforms. The goal is clear: to unlock investment and innovation; offer a pragmatic, flexible alternative to the increasingly centralised European bloc; and make the UK the best country to invest anywhere in the world, making it cheaper, easier and quicker to do business.
To this end, we have been following the launch of PISCES with interest. The Private Intermittent Securities and Capital Exchange System will give private companies a regulated way to offer liquidity in their shares without going for an IPO. The London Stock Exchange was approved as the first PISCES operator, and secondary trading activity is expected to commence soon, hopefully providing the liquidity release valve that private markets have been desperate for.
In Brussels, the focus is on the Market Integration and Supervision Package (MISP). Adopted by the Commission on 4 December 2025, this package is the latest attempt to centralise supervision under ESMA. It is a bold move towards a true ‘Savings and Investments Union’, but it is already meeting stiff resistance. National regulators are unlikely to agree easily, and we expect the political wrestling match to dominate the European narrative throughout 2026.
What Does This All Mean for the Fintech Community?
It means the market has a new set of demands. Financial institutions are looking for partners that have unique / niche, yet deep-seated, expertise to help them navigate the complexity of the markets they operate in. And Fintechs are rising to the challenge, as architects of innovation and operational resilience. Collaborations and partnerships are developing that will accelerate the pace of innovation while modernising the industry’s infrastructure and satisfying compliance requirements.
More than ever before, the Fintech companies that will succeed this year are those that can solve a headache and remove risk. That is the value proposition that will resonate in 2026, and is something the UK Fintech industry has a long history of innovating to provide.
