The U.K.’s Financial Conduct Authority (FCA) is considering AI-assisted case reviews as digital trading creates new supervisory challenges, Chief Executive Nikhil Rathi said in a draft speech prepared for the City of London’s annual City Dinner on Oct. 22. The FCA cautioned that the posted text may differ from the remarks he delivered.
Rathi pointed to decentralized finance, continuous trading, weekend price-setting and market structures developing alongside conventional venues. He said these changes can heighten volatility and concentration, create new avenues for market abuse, and allow financial crime to cross national borders.
The challenge, Rathi said, is that products and risks can develop faster than regulation, legislation and courts can respond. A threat may begin beyond the FCA’s supervisory boundary but still harm markets the agency oversees. He said the regulator should assess which of its existing powers could address that damage. Protecting the U.K. financial system’s integrity is one of the FCA’s operational objectives. Its secondary objective is to facilitate the U.K. economy’s international competitiveness and medium- to long-term growth.
Rathi described AI agents as potential assistants for casework. They could review cases, bring together returns and intelligence, and flag gaps or concerning details for staff. The posted draft gives no timetable for using the tools. It leaves judgments about possible AI-driven market manipulation and risks to the wider financial system with human specialists.
Rathi said effective use of new technology could raise productivity and help economic growth reach more people across the U.K. He also warned that market shocks and financial crime can harm companies, investors and consumers.
Separately, a reform that requires legislation is expected to bring about 60,000 legal, accountancy and trust and company service businesses under FCA anti-money-laundering supervision. The regulator says the estimate may change and expects a phased transition to start in late 2028 and run through 2030.
The FCA and Bank of England said in May that 16 firms were working with them to test tokenized asset issuance and settlement through the Digital Securities Sandbox. The Bank of England said in October that it plans to publish a full tokenization roadmap later in 2026.
