HM Treasury (HMT) has issued a consultation paper, the Wholesale Markets Review, which proposed the United Kingdom’s (UK) plans to diverge from the European Union’s (EU) financial market regulations. The review outlined the UK’s post-Brexit intentions to strengthen its position as one of the largest capital markets globally. HMT has deemed the reformation of the EU’s restrictive MiFID II regulations key to situating the UK as a global financial hub.
What financial framework will guide the proposed changes?
The HMT consultation, informed by discussions that the HMT and the Financial Authority Conduct (FCA) have had with market participants over the past 18 months, provides a financial framework that intends to:
- improve openness and competitiveness;
- support economic growth;
- deliver fair and proportionate regulation; and
- uphold high regulatory standards.
What are the proposed changes?
The UK government considers the on-shored EU MiFID II regulations unsuitable to London’s markets for stocks, bonds, derivatives and commodities, due to the administrative burdens imposed on traders. The review pursues a less prescriptive regime for UK’s wholesale markets with the proposed reforms comprising the:
- clarification of the regulatory perimeter and conditions governing trading venues and systematic internalisers to enable the market to operate in confidence and promote innovation;
- removal of requirements limiting firms’ ability to execute transactions where they receive the best outcomes for investors such as eradicating the share trading obligation and double volume cap;
- revision of the transparency regime for fixed income and derivatives markets to ensure the correct instruments are subject to transparency requirements;
- reviewal of the commodities regime to ensure market activity is not unnecessarily restricted; and
- amendments to the market data regime to enable participants to identify the best available prices.
What does this mean for you?
No changes to UK trade and transaction reporting obligations have been proposed as of yet. However, as the regulation changes and diverges across jurisdictions, our team will keep you informed. TRAction will monitor the outcomes of this consultation and adopt any necessary modifications to UK and/or EU reporting obligations.
If you would like to delegate the confusion that often comes with reporting, particularly as regimes change, to a team like TRAction, please contact us.