FCA chief calls for UK finance renaissance at market speed
Nikhil Rathi, chief executive of the Financial Conduct Authority, emphasized the UK's position as a leading global financial hub. He called for continuous adaptation at 'market speed' to capitalize on opportunities and address challenges.
London's enduring market strengths
Nikhil Rathi highlighted the UK's continued strength as a global financial hub, noting London's position just one point behind New York in the Global Financial Centres Index.
The UK leads in FX trading, international debt issuance, and OTC derivatives.
Rathi attributed this success to reliable execution, resilient infrastructure, strong talent, and a credible, pragmatic rulebook.
The Financial Conduct Authority (FCA) is actively fighting financial crime and market abuse, citing recent prosecutions, fines, and custodial sentences.
He referenced a £27.7 million fine against a Citigroup entity for systems and control failures that led to an erroneous $1.4 billion equities sale.
The FCA is also delivering reforms to remove unnecessary friction, including a revised framework for commodities markets, a fixed income consolidated tape, and new prospectus rules to ease capital raising.
These changes have already facilitated around 50 significant corporate transactions.
The next frontier: AI and digital assets
Rathi outlined future reforms, addressing contested areas such as private credit and transaction reporting.
The UK will move to T+1 settlement next October, aligning with major European markets, and is exploring regulation for market infrastructure using digital assets and distributed ledgers.
Divergence persists on an equities consolidated tape, prompting comprehensive consultation.
The FCA is also consulting on market risk capital for investment firms.
Regarding AI, Rathi noted that human approval for every decision is impractical at market speed, emphasizing the need for robust risk controls.
He encouraged wholesale trading firms to engage with FCA's innovation programs.
A crypto framework is expected in early summer, with the regulatory gateway opening in September, supporting stablecoins and tokenisation.
Renaissance at market speed
Rathi's speech delivers a stark message: the UK financial sector must embrace continuous, rapid transformation.
It highlights the regulator's commitment to fostering innovation while upholding market integrity, even amidst contested policy choices.
This proactive approach is essential for the UK to secure its competitive future in a dynamic global financial landscape.