The UK’s Financial Conduct Authority (FCA) has opened a consultation to help define which operators must be licensed to trade stocks and bonds in the post Brexit era.
The announcement is part of the HM Treasury’s wider Wholesale Markets Review (WMR) aimed at introducing approaches “better tailored to the UK market” post-Brexit.
It also comes on the heels of new Prime Minister Liz Truss promise to “unshackle” the City of London from European Union rules to boost its global competitiveness.
The watchdog said it is now able to “consider approaches which are better tailored to the UK market.”
However, it said there will be no changes to the legal perimeter which determines mandatory licensing for trading venues, but this is a clarification of where that border lies.
“Principally, we are concerned that some firms may be providing arrangements which constitute a multilateral system without being authorised and regulated as a trading venue,” the FCA said.
It added that this could leave investors without protection and give some market participants an unfair advantage over licensed players, who face higher regulatory costs. t
In its paper, the regulator said a multilateral trading platform which requires a licence comprises multiple third-party buying and selling trading interests in financial instruments, such as stocks and bonds.
Bulletin boards would not be included, nor standalone chat rooms unless part of a multilateral platform.
Britain’s finance ministry said last year that market participants can only compete properly if they have certainty about their own regulatory status and that of rivals.
More guidance on the licensing perimeter would reduce risks for firms and ensure there is confidence in Britain’s rules, the ministry said.
The consultation ends on 11 November and the FCA aims to finalise the guidance in the second quarter of 2023.