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UK watchdog clarifies post-Brexit conditions for share trading licences

September 23, 2022 00:00:00

LONDON, Sept 22 (Reuters): Britain's financial watchdog set out plans on Thursday to clarify which operators must be licensed to trade stocks and bonds in its latest post-Brexit move to keep London's capital market competitive.

Britain's new Prime Minister Liz Truss has promised to "unshackle" the City of London from European Union rules to boost its global competitiveness, with further details due on Friday.

"Following the UK's withdrawal from the EU, we are now able to consider approaches which are better tailored to the UK market," the Financial Conduct Authority said in a consultation paper on Thursday.

The watchdog said it won't change the legal perimeter which determines mandatory licensing for trading venues, but is clarifying where that border lies. Trading technology has advanced rapidly to include multi-lateral systems, which link banks, brokers and asset managers.

"Principally, we are concerned that some firms may be providing arrangements which constitute a multilateral system without being authorised and regulated as a trading venue," the FCA said.

This could leave investors without protection and give some market participants an unfair advantage over licensed players, who face higher regulatory costs, the FCA said.

In its paper, the watchdog said a multilateral trading platform which requires a licence comprises multiple third-party buying and selling trading interests in financial instruments, such as stocks and bonds.

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