UK regulators hit the reset button

August 3, 2021

As the UK gets ready to hit the reset button on the post-Brexit regulatory environment, the Treasury has recently shared its vision for the future. The flurry of speeches and publications circling around certainly sets out to paint a positive picture, both in the new chapter for financial services and the plans for the future framework for regulation. These plans include taking EU rules, on-shored during the Brexit process, and pulling them from the UK statute. Moving these rules into the regulators’ rule books is a mammoth task, but will hand rule-making responsibilities firmly over to the UK regulators and away from Parliament. This move will maintain regulator independence and means that legislative amendments can be avoided for every future rule adjustment.

What better opportunity than to sift through all the files and make some appropriate changes. Freed from the need to balance the interests of 27 countries, the UK is ready to adopt an altogether sprightlier approach with robust regulation at its core.

This heralded transformation of the regulatory infrastructure will set the foundations. The Wholesale Markets Review consultation paper has a more detailed focus on topics such as access to liquidity, the transparency regime for fixed income and derivatives, the UK commodities regime, and access to market data.

Is this the start of some real UK divergence from EU rules? Not as such, according to the consultation paper, which is open until late September. “This review is not about lowering standards for wholesale capital markets. Instead it is about the need for regulation to be adjusted on the basis of evidence and experience to ensure it effectively addresses risks.” Perhaps Brussels will follow suit?

Meanwhile in Europe, the review of MiFID 2 is underway and rule changes are expected on that front for EU regulated firms. With the UK fine-tuning regulations to fit more closely to their domestic use case, the result will be differences. For the pan-European trading desk, this means that multi-entity and multi-jurisdiction support in one platform is even more important as the regulatory landscape evolves.

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