We consult on proposals aimed at improving UK equity market

Today we published a Consultation Paper (CP) on proposals aimed at improving the functioning of equity secondary markets.

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

The CP takes that commitment forward by focussing on reforms that are not contingent on changes that are intended to be implemented via the Financial Services and Markets Bill the government has announced it will introduce.

In PS21/20 we changed requirements that impose costs on firms that have not delivered material benefits. In this CP we propose reforms to lower the cost of reporting for firms, improve post-trade transparency and remove some restrictions that are limiting the ability of UK trading venues to compete with other markets.   

In particular, the changes we are consulting on 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.

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