The Financial Conduct Authority (FCA ) has unveiled a series of new measures aimed at solidifying the UK's status as a global financial hub. The proposed changes span from launching a consolidated tape (CT) for trading data to a comprehensive overhaul of the regulatory framework.
The FCA aims to stimulate more informed investment decisions, provide a robust environment for trading, and bolster competitiveness.
FCA Introduces Consolidated Tape for Low-Cost Trading Data
In an effort to enable more efficient and well-informed investment decisions, the FCA intends to introduce a consolidated tape. This new measure combines multiple sources of trading data into a single stream, significantly improving transparency and accessibility.
On top of that, it reduces the cost and enhances the quality of trading data. Initially, the CT will be implemented for bonds, in which the UK is a global market leader before being introduced to equities .
The FCA plans to conduct a competitive tender to assign a single CT provider for bonds to implement this initiative. This plan forms a part of the Edinburgh reforms and is set to materialize by 2024 with the collaboration of the government.
“We are adapting our rules to make sure the UK market works well, providing certainty for firms and so providing a good environment for investment,” Sarah Pritchard, the Executive Director of Markets and Executive Director of International at the FCA, commented.
“The new consolidated tape will help reduce trading costs, increase transparency and improve data quality.”
Moreover, the FCA is set to consider additional modifications to bond and derivative transparency requirements later in the year. The objective is to establish a simpler, more effective regime that can improve the content and delivery of trade data in the UK markets.
Additional Measures by FCA
In addition to these significant measures, the FCA made further announcements to enhance competitiveness. Among these include the issuance of guidance addressing queries from market participants aimed at promoting innovation and new technologies. The new guideline, which will be enforced from October 2023, seeks to clarify when firms might need authorization as a trading venue.
“Our other measures announced today aim to further support the UK’s thriving financial services sector,” Pritchard added.
The FCA also introduced the pre-application support service (PASS) to assist firms, particularly those from overseas or planning expansion outside the South-East and within devolved nations. This service will offer benefits like pre-application meetings and the opportunity to hear FCA speakers discuss the authorization process at industry events.
Important Regulatory Updates
According to the FCA, the global financial sector witnessed a significant transformation as the US dollar London Interbank Offered Rate (LIBOR) panel bid farewell. On 30 June 2023, the overnight and 12-month US dollar LIBOR settings were permanently discontinued, while the 1, 3, and 6-month settings continued in a synthetic form.
Meanwhile, the regulator found itself in the final stages of implementing cryptocurrency marketing and advertising regulations within the country. These regulations are scheduled to come into effect in October 2023. The decision came at a time when the number of cryptocurrency holders in the UK had more than doubled in the past year, reflecting the growing interest and participation in the crypto market.
In tandem with these developments, the Joint Regulatory Oversight Committee (JROC), co-led by the FCA and the Payment Systems Regulator (PSR), released its proposed guidelines for the upcoming phase of open banking in the United Kingdom.
