The Financial Conduct Authority (FCA) is committed to maintaining open financial markets following the end of the Brexit transition period, warning that not doing so will disrupt the city.
Speaking today at Mansion House in an address to city regulators, new chief executive Nikhil Rathi said the watchdog had been keeping its focus on readiness for the end of the Brexit transition period.
Rathi said the FCA was “committed” to upholding international standards and maintain open markets in a move to minimise disruption to the city.
He said: “We continue to operate in an open, co-operative way, providing technical support to the government in negotiations and deepening our relationships with international regulators, and adapting to our new relationship with EU counterparts.
“We remain committed to upholding high international standards and to maintaining open markets. Fragmentation will affect liquidity, reduce the ability to net transactions, make risk management more difficult and feed through into a higher cost of capital.”
Rathi said any additional costs thrown up by fragmentation would hit savers and pensioners in the UK and the EU and, “we are doing what we can to avoid this.”
Last week the (FCA) said it would allow firms to continue from January trading all shares on trading venues from the EU where they choose to do so, rather than limiting themselves to platforms headquartered in the UK.
This flies in the face of what has been said at the EU’s end – the EU’s securities watchdog ESMA has already said that investors from the bloc can only trade sterling-denominated shares in London on platforms like the London Stock Exchange’s Turquoise, Cboe, and Aquis Exchange.
Elsewhere Rathi told listeners the FCA was transforming into a more data-focused regulator. He said doing so would allow the watchdog to intervene sooner in problems, reducing consumer and market harm in the process.
The chief also admitted the FCA had “much work to do on diversity and inclusion at the FCA.”
He continued: “Delivering on the Women in Finance Charter and recognising the immense importance of an organisation like ours reflecting the communities we serve in all parts of the UK with genuine diversity of thought brought to bear on the complex problems we are trying to solve.
“We will also be looking to the industry to work hard with us on these issues to tackle some deep-rooted issues and ensure the cultural change we all would like to see.”
Rathi was appointed chief executive of the FCA on 1 October 2020.