In its latest post-Brexit step to maintain London’s capital market’s competitiveness, Britain’s financial watchdog unveiled plans on Thursday to clarify which operators must be licensed to trade stocks and bonds.
To increase the City of London’s competitiveness internationally, the next British Prime Minister Liz Truss has pledged to “free” it from European Union regulations. Further information will be released on Friday.
The Financial Conduct Authority stated in a consultation paper on Thursday that it was now possible to examine strategies that were more appropriate for the UK market in light of the UK’s withdrawal from the EU.
The watchdog has stated that it will not alter the legal framework that establishes the requirement for trading venues to obtain required licenses, but it is defining where that boundary is.
With the rapid advancement of trading technology, multilateral networks connecting banks, brokers, and asset managers already exist.
The FCA expressed worry that certain companies would offer solutions that make up a multilateral system without being approved and regulated as a trading venue.
According to the FCA, this might leave investors vulnerable and offer some market actors an unfair edge over licensed competitors, who pay greater regulatory expenses.
The watchdog claimed in his study that the multilateral trading platform, which calls for a license, entails buying and selling several interests from third parties in trading financial products like stocks and bonds.
Unless they are a part of a multilateral platform, message boards and isolated chat rooms would not be included.
The FCA continued, “In our opinion, conducting trades over the phone is not a sufficient criterion for a firm to seek a license as a trading venue.
The UK Treasury stated last year that market participants cannot compete effectively unless they are confident in both their own and their competitors’ regulatory status.
The government stated that further clarification on the extent of licensing will lower business risks and ensure trust in UK laws.
In the second quarter of 2023, the FCA plans to release the rules in their final form.
