Improving Equity Secondary Markets Consultation Paper 

On 5 July, the FCA published a Consultation Paper on proposals to improve the functioning of equity secondary markets. 

The changes are part of the Wholesale Markets Review (WMR), which the FCA have been conducting with the Treasury to improve the UK’s regulation of secondary markets. The Treasury’s consultation response to the WMR said the FCA would reform the parts of the regime that are set out in regulatory rules and guidance to remove the most burdensome and unnecessary regulatory requirements as soon as possible. 

The FCA’s CP takes that forward by focusing on reforms that can be made without the forthcoming changes due via the Financial Services and Markets Bill. 

Improvements

In particular, the changes would: 

  • improve the content and consistency of post-trade transparency reports 
  • establish a new designated reporter status for OTC trades  
  • allow UK trading venues to use reference prices from overseas markets where those prices are robust, reliable, and transparent 
  • permit the use of the tick size regime from overseas primary markets 

The FCA are also seeking views on the structure of UK markets for retail orders and on their approach to improving UK markets’ resilience to outages. 

The FCA aim to consult on other reforms covered in the WMR which are more closely linked to changes to legislation over the course of this year and next.  

Click here to read the Consultation Paper

Author: Alex Hackett, Senior Analyst

Alex is a member of the investment funds team. She is involved in the portfolio construction process and assists with regulatory reporting, trade surveillance and monitoring.

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