FCA outlines adaptive regulatory approach for UK markets

FCA Chief Executive Nikhil Rathi outlined the regulator's commitment to an adaptive and reform-minded approach to support UK financial market competitiveness. Speaking at the Association of Foreign Banks luncheon, Rathi emphasized balancing stability with innovation.

Wholesale reforms drive UK market competitiveness

Rathi highlighted the robustness of the UK as a global financial center, citing impressive trading volumes, including a 69 percent growth in Brent trading and over 100 percent growth in SONIA futures.

He noted London's strong position in the Global Financial Centres Index, just one point behind New York, as evidence of global client trust during stress.

The FCA's wholesale reforms, such as new listing and prospectus rules, a Public Offer Platform, and revised frameworks for fixed income transparency and securitisation, have supported the strongest year for UK listings since 2021.

These changes aim to reduce friction and facilitate capital raising, demonstrating the FCA's willingness to act at pace to improve market outcomes and responsiveness to market behavior.

Balancing agility with high standards

The speech underscored the necessity of 'adaptive stability' in an era of heightened pace and volatility, driven by rapid technological advancements like AI, which Rathi noted is doubling capabilities every seven months.

The FCA aims to maintain fundamental resilience while strengthening competitiveness by embracing change rather than resisting it.

This approach extends to retail services, with reforms to mortgage rules allowing lenders to offer more to borrowers and the removal of the contactless payment cap to enhance flexibility.

Rathi stressed that while the FCA is reform-minded and flexible, this does not come at the expense of high standards, with market integrity and fighting financial crime remaining primary tasks, including stepping up action on market abuse and insider trading.

Pragmatic evolution, not revolution

Rathi's address signals a clear shift towards a more proactive, market-responsive regulatory stance, moving beyond traditional oversight to foster innovation.

While emphasizing competitiveness, the challenge lies in ensuring high standards are genuinely maintained amidst rapid technological and market changes.

This pragmatic evolution is crucial for the UK's global standing, but its long-term success hinges on effective implementation and continuous adaptation without compromising integrity.