Protecting Its Forex Hub Status, UK Won't Impose FX Forwards Reporting until Forced to by the EU

The UK's Financial Conduct Authority (FCA) is determined not to comply with the European regulatory approach on the regulation of foreign exchange derivatives until it is legally forced to in 2017 or later, according to a report in Risk Magazine.

The dispute between the European Commission (EC) and the UK FCA has been ongoing since the start of the year, and is centered around which trades must be reported and cleared by regulated firms.

The EC and the European Securities and Markets Authority's (Esma) consensus is that Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term forwards are derivatives which fall under mandatory reporting regulations, however, the FCA does not currently qualify them as such.

The EC insists that the FCA cannot avoid legislating mandatory FX forwards regulations. "The UK must ensure, like any other member state, its legislation is fully in line with this approach. It's clear the stance taken in the UK, as we understand it, is not in line with our approach," the magazine's EC source reportedly said.

The FCA on the other hand, says it will not change its position until the last moment, this being the implementation of the new Markets in Financial Instruments Directive (Mifid II). As London enjoys a unique leading position in the Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying Read this Term world, the UK has a vested interest to protect its regulated firms and not to burden them with excessive regulations, in order to protect profits and jobs for the city.

Differences arose because the European Market Infrastructure Regulation (Emir) could be interpreted differently by EU member states, and the UK implementation excludes forex forwards, non-deliverable currency forwards and spot transactions for forex and commodities from the definition of a derivative, as long as they satisfy a commercial purpose.