The European Union is preparing its next wave of financial sector reforms, and 2025 could mark a turning point. With a long list of proposals on the table, the central question is whether Brussels can deliver meaningful change or if national interests and bureaucracy will once again stand in the way.
The EU aims to strengthen financial markets, promote sustainability, and enhance economic resilience. However, the sheer volume of initiatives raises questions about whether they can all be implemented effectively. This article outlines the main financial regulatory actions expected at the EU level in 2025.
Addressing Europe’s investment gap
In March, the European Commission is set to unveil its long-awaited plan for a Savings and Investment Union. The goal is to encourage households to channel more of their savings into capital markets. This initiative is part of the broader Capital Markets Union (CMU) project, which seeks to simplify cross-border investment and make investing easier for retail investors.
The CMU has often struggled to gain momentum. In 2025, greater collaboration between Brussels and member states could breathe new life into the project. Geopolitical challenges, such as Brexit, underscore the need for stronger financial integration within Europe.
Broader support seen for CMU
John Berrigan, director-general for financial services at the European Commission, recently flagged that the CMU project is now seeing broader political support because it is increasingly supported by EU member states, and no longer is seen as a project purely driven from Brussels.
“Political will is the cornerstone of progress,” Berrigan told asset managers at a recent year-end conference in Brussels. “What we’re seeing now is a more unified understanding that robust financial markets are a prerequisite for resilience and competitiveness.”
Yet, experts caution that changing household behaviour will take time. Europeans have long favoured traditional savings accounts over market investments, a cultural preference that will not shift overnight.
What’s more, longstanding issues persist. Differences in national regulations and varying levels of market maturity across the EU bloc remain significant obstacles.
Updating securitisation rules
The EU plans in 2025 also seek to reform securitisation rules to improve transparency and risk management. The objective is to make Europe’s securitisation market more competitive with its US counterpart, while maintaining necessary safeguards. Market participants, however, warn that excessive regulation could stifle growth in this vital sector.
An EU consultation on securitisation closed earlier in December and asked stakeholders to address simplifying compliance with transparency and due diligence requirements, refining definitions of “securitisation” and “sponsor”, and enhancing the framework for simple, transparent, and standardised (STS) securitisations. The new EU proposal is expected to follow in the second quarter.
‘Omnibus package’ for sustainability
Brussels in 2025 will introduce an “omnibus package” aimed at streamlining sustainability-related rules, including the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy. While the Commission promises easier compliance, businesses remain cautious, questioning whether the changes will genuinely reduce complexity or merely repackage existing requirements.
SFDR 2.0: tackling greenwashing
The Sustainable Finance Disclosure Regulation (SFDR) will undergo revisions to address criticisms of greenwashing and confusion over fund classifications. The updated rules aim to provide clearer definitions and reporting requirements, with the possibility of new fund categories to better align with actual investment practices.
Reforming money market funds
Money market funds (MMFs) will face new rules designed to improve liquidity and stability. At the same time, Europe’s planned transition to T+1 settlement—where trades are settled one day after execution—requires careful coordination among regulators and market participants. While the shift is expected to enhance efficiency, it could also impact liquidity and cross-border transactions.
Adjusting benchmarks and Ucits rules
The European Securities and Markets Authority (Esma) will provide guidance on updating the Ucits directive and the Benchmark Regulation. These updates aim to address challenges related to the Libor/Ibor transition and the use of third-country benchmarks, ensuring Europe’s financial framework remains robust and adaptable.
Retail investments and financial data access
The Retail Investment Strategy (RIS) and Financial Data Access (Fida) proposals will continue to be key discussion points in 2025. The RIS seeks to protect retail investors and improve the clarity of financial advice, while Fida aims to create a more open and competitive market for financial data.
Implementation challenges on the horizon
Several significant regulations will come into effect in 2025, including the Digital Operational Resilience Act (Dora), updated AIFMD/Ucits rules, and MiFID2/MiFIR revisions. Financial firms will need to adapt to new requirements covering operational resilience, clearing obligations, and fund management practices.
Global regulators are also increasing their scrutiny. The Financial Stability Board (FSB) will report on leverage risks, while the International Organization of Securities Commissions (IOSCO) will focus on liquidity risks.