The Financial Conduct Authority (FCA) has announced a series of measures to help strengthen the UK’s position as a global financial centre.
To help all investors make better, more timely decisions, the FCA is proposing to set up a consolidated tape (CT), so they can get clear and low-cost trading data.
A CT combines multiple sources of trading data into one stream of information.
This will increase transparency and access to trading data by lowering its cost and improving data quality.
The FCA is proposing a CT first for bonds, where the UK has a leading global market, followed by equities.
The regulator intends to run a competitive tender process to appoint a single CT provider for bonds.
As part of the Edinburgh reforms, the FCA is working with the government with the aim of having the regulatory framework in place by 2024.
By building a more complete picture of the market, a CT will reinforce the UK’s position as a leading centre for the listing and trading of bonds.
The FCA will consult on further reforms to bond and derivative transparency requirements later this year.
It aims to create a simpler and more effective regime which will enhance the content and delivery of trade data in UK markets alongside the CT.
Other announcements by the FCA today will support wholesale markets and wider competitiveness.
To further support innovation and the development of new technologies, the FCA has issued more guidance.
It reconfirms the current rules, addressing queries that market participants have made to level the playing field and let firms know when they may require authorisation as a trading venue.
The guidance will come into force in October 2023.
Building on its existing support for new entrants to financial services, the FCA is launching a new pre-application support service (PASS) for overseas wholesale firms and their advisers wishing to expand into the UK.
This can include firms already in the UK but planning to set up in the devolved nations and outside the south-east, and those with innovative, complex or high-risk business models.
The service, starting in July, will see more support, such as pre-application meetings and the opportunity for FCA speakers to talk about the wholesale firm authorisation process at industry events, roundtables and conferences.
FCA executive director of markets and international Sarah Pritchard said: “We are adapting our rules to make sure the UK market works well, providing certainty for firms and so providing a good environment for investment.
“The new consolidated tape will help reduce trading costs, increase transparency and improve data quality.
“Our other measures announced today aim to further support the UK’s thriving financial services sector.”
Commenting on the development Investment Association director of investment and capital markets Galina Dimitrova said: “The IA welcomes the publication of the FCA’s long awaited consultation paper on developing a CT framework in the UK.
“An appropriately constructed and fairly licensed CT will be an important cornerstone in reforming and tailoring UK capital markets.
“A CT for bonds followed by a CT for equities and ETFs will help ensure a golden source of market data on prices and volumes traded for these instruments and will enable all market participants, including retail investors, to access robust data in a timely fashion enabling IA members to best serve the needs of their clients.
“Additionally, we very much support the FCA’s intentions to run a competitive tender process to appoint a CT provider for bonds as this will likely aid competition and drive innovation. However, we caution that any fee structure associated with accessing the CT must be palatable and fair for all market stakeholders.
“We look forward to the speedy implementation of this vital initiative and hope to see detailed information regarding the framework for a CT for equities and ETFs in due course.”
