IS THIS THE NEXT BIG BANG?
Not quite, but it represents a shift in the regulatory pendulum from years of strengthening bank capital requirements and enforcing consumer safeguards to considering how to make rules function better for Britain after Brexit.
First named the "Edinburgh Regulations" after the city where they were formally presented by finance minister Jeremy Hunt, the revisions were initially dubbed a Big Bang 2.0 on the same scale as far-reaching 1980s share trading reforms.
The administration has toned down its rhetoric, emphasizing that there would be no "race to the bottom," significant departures from international norms, or elimination of investor protections, but that authorities should help the financial sector's international competitiveness.
Hunt said it would be incorrect to refer to the reforms as a "Big Bang" given the need to avoid "unlearning" lessons from the 2008 global financial crisis, and he emphasized regulators' independence.
"The City does not support deregulation." "Today's announcements point to evolution rather than revolution," said Alasdair Haynes, CEO of the Aquis stock market.
WHAT EXACTLY IS RING-FENCING?
Britain has previously announced a relaxation of capital requirements for insurers and is now focusing on banks.
Since January 2019, banks have been required to ring-fence their deposit-taking arms with capital to protect them from blow-ups in their riskier activities.
Banks have complained that the requirements are excessively stringent, making it difficult for smaller lenders to compete with larger lenders in the mortgage market. The government stated that it will alter the rules based on the suggestions of a review it commissioned.
The government will deliberate in mid-2023 on exempting banks that do not engage in substantial investment banking activities from the requirements, as well as boosting the deposit level that triggers ringfencing compliance from 25 billion pounds to 35 billion pounds.
ARE BANKERS NOW OUT OF THEIR MINDS?
It's hardly a return to pre-financial-crisis lite-touch.
The administration has already stated that it will repeal an EU cap on banker bonuses, while other restrictions on how bonuses are awarded are expected to remain in place.
After few individuals were penalized for malfeasance that led to the global financial crisis when taxpayers bailed out lenders, Britain implemented laws in 2016 to hold senior bankers, and senior officials at insurers in 2018, directly accountable for the decisions they make.
It was expected that it would be used to publicly disgrace bankers by placing "heads on sticks," but there have been few investigations or enforcement proceedings so far. Bankers claim that regulators also take too long to approve senior postings.
The government will examine this senior management and certification framework in the first quarter of 2023, but no details on the scope of any modifications have been released.
WHERE ARE THE MARKETS?
There will be a flood of reviews as London tries to catch up to New York in terms of listings.
The regulations governing short-selling, or bets that the price of a company will decline, are being reviewed. The administration wants to replace an EU-era "PRIIPs" explanatory paper issued to investors with an alternative framework.
An industry group will investigate the case for reducing the time it takes to settle a stock trade from two working days to one, as is currently proposed in the United States.
Prospectus guidelines, which businesses must provide to investors when they list on an exchange, will be revised, as will securitisation requirements.
The government promises to implement guidelines for a "consolidated tape" by 2024, which will give market pricing for investors to compare best bargains across trading platforms.
The government will implement suggestions from a review of how listed firms raise new cash from investors.
There will be a review of EU rules requiring brokers to itemise fees for stock choosing research and executing stock orders, a practice known as 'unbundling,' which the EU has already partially reversed. There will also be experiments for an intermittent wholesale market venue to increase companies' access to finance before they go public.
Comments
Post a Comment