Karen Northey, Director of Corporate Affairs at the Investment Association commented:

“The Chancellor has set out an ambitious agenda to ensure the UK’s financial services sector continues to flourish and play its role in delivering economic growth. Our industry strongly supports her commitment to recalibrate risk and acknowledgement of the importance of investment to grow the economy.

“The new remit letters to the regulator rightly emphasise the importance of growth and competitiveness. The FCA’s secondary objective is central to ensuring the UK remains a world-leading centre – not just for investment management – but for innovation and wellbeing of all, and we are pleased to see the Chancellor recognise that appropriate risk in the system is a positive and growth-oriented necessity.

“We want to ensure the UK remains an attractive place for companies to list, invest and do business. This requires a rebalancing of attitude towards risk. Proposals to broaden access to private markets through PISCES and plans to make the UK a leading centre for green finance indicate a positive shift towards a growth-focused mindset. We are also pleased to see the government championing innovation by delivering on its plans to introduce a digital gilt – a key recommendation of the Asset Management Task Force’s work on tokenisation. As technology continues to evolve, speed and regulatory responsiveness will be critical to the success of these initiatives.

“Ensuring our pensions system is fit for purpose will be mission critical in securing the financial futures of millions across our country. The proposals to further consolidate both the LGPS and DC master trusts are an important step.  To fully realise the benefit, we must ensure that we deliver ‘sophisticated scale’ – placing an emphasis on strong governance, accountability and appropriate investment expertise to deliver the most productive outcomes and create value for money for savers. With an ambitious approach, this could channel more pensions capital into fast-growing businesses and infrastructure projects.

“Today’s announcements mark the welcome start of a bold reform programme and we believe even more can be achieved. We look forward to continuing to engage with government over the coming months, to help establish a culture of inclusive investment and create a world-leading economy and investment management sector.”

Source: IA

Kelly Mathieson, Chief Business Development Officer at Digital Asset, said in an email:

“Rachel Reeves is right to recognise that the UK must modernise the technology underpinning the 2.5 trillion GBP gilt market to make sure it’s not left behind. There’s a lot we can learn from the work already being done in other jurisdictions. Most recently, Euroclear and the World Gold Council successfully piloted the tokenization of Gilts, Eurobonds and Gold on blockchain. Connecting these assets to a digital infrastructure demonstrates that tokenizing gilts can enhance collateral mobility, improve liquidity, and increase transactional efficiency.

“The 2022 gilt crisis significantly impacted market liquidity and the ability of institutional investors to meet margin calls. Gilts were sold in high volume, widening margin calls and creating a negative spiral. Digitised gilts would have provided real-time collateral mobility to meet intraday margin calls, which would have significantly mitigated the need for mass market selling, which resulted in the gilts crisis.

“The UK and the DMO now need to make the right technology choices to avoid replicating the operational challenges of the legacy systems used today. The UK gilt market needs technology rails that meet this high regulatory bar, make the market more efficient and liquid, and ensure privacy. Emerging networks can work within the carefully constructed legal frameworks already in place to make the financial system more efficient and reduce risk.”

Source: Digital Asset

FCA statement on the Chancellor’s Mansion House speech

The financial services sector is the engine of the country’s economy. A successful sector drives prosperity for companies, getting money to flow to small and medium-sized businesses allowing them to invest and grow.

The UK is a magnet for talent and investment, with London ranking as the world’s second financial centre. We are the world leader for international bond issuance, foreign exchange trading and cross-border banking. The UK’s asset management, hedge fund and private equity sectors continue to be the largest in Europe, alongside our insurance and long-term savings market.

We’re a partner for growth and we support the Chancellor’s vision for achieving it. Our regulation enables a fair and thriving financial services sector that allows people to spend, save and invest in their own future.

We have fully embraced our secondary international competitiveness and growth objective, embedding it into our processes, policy making and culture. We’ve established a dedicated team to advise on implementing the new objective and our policy work now clearly articulates how we have applied the objective.

Our reform of UK listing rules – the most significant in 3 decades – aims to encourage a wide range of companies to list and raise capital in the UK, increasing opportunities for investors.

A new platform to allow private companies to trade their securities (PISCES) will support companies to scale up and grow and provide investors with better access to exciting companies. We are engaging market participants, industry leaders, trade bodies and exchanges to develop a proportionate regulatory framework and we look forward to publishing our consultation shortly.

We’ve provided asset managers greater freedom in how they pay for research and are streamlining complex EU rules in the alternative asset management sector, cementing our position as the world’s second largest asset management hub.

Wholesale market firms wishing to expand into the UK can now benefit from our dedicated pre-application support service. We’re supporting UK and international insurance brokers by clarifying our conduct rules and distribution services.

In response to the Mansion House speech, we have published updates on specific issues raised in the speech:

• Environmental, social and governance (ESG) ratings
• Advice Guidance Boundary Review
• National payment strategy
• Modernising the redress system

We will work quickly with the Government, industry, consumer groups and other interested parties as we deliver this important work.

Recognising the vital role we play in enabling new firms to get off the ground, we have improved our authorisation process with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23. Our innovation services, such as sandboxes, support firms to test drive and refine their innovative new products while our early and high growth oversight programme helps new firms meet standards so they can grow.

And we have been seeking views on how we seize the opportunity of the Consumer Duty to streamline our rulebook, so we can lower costs for businesses and support the competitiveness and growth of the economy.

When it comes to growth, regulation is one part of the picture. We know there’s more to do but we are committed to playing our part.

Source: FCA

MFA responds to HM Treasury Mansion House speech

MFA issued the following statement in response to Chancellor Rachel Reeves’ Mansion House speech:

“Alternative investment funds help pensions provide people with a comfortable retirement by generating steady returns throughout the economic cycle. Positioning pension funds to invest in a more diverse range of assets, including alternatives, will benefit retirees and enhance the UK’s economic growth prospects. MFA is encouraged by the renewed emphasis on the financial regulators’ growth and competitiveness objective, and will continue to engage with HM Treasury and the regulators to further cement the UK as a global hub for asset management.” – Rob Hailey, MFA Head of EMEA Government Affairs

Source: MFA

Green finance is the UK’s growth engine – E3G reaction to Chancellor’s speech

Commenting on the Government’s introduction of private stock market, PISCES, presenting a threat to AIM, Douglas Grant, Group CEO of Manx Financial Group, said: “Any mechanism that enables entrepreneurs to unlock equity is a welcome innovation. However, it’s unclear why this approach would necessarily lead to an increase in IPO activity. Given that PISCES serves as an alternative to more heavily regulated stock exchanges, there is a reasonable concern that platforms like AIM might perceive it as a competitive threat, potentially affecting their market position.

Additionally, a vital factor that requires consideration is the alignment of tax strategies to incentivise entrepreneur participation. Without a supportive tax framework, uptake may be limited.“One of the most promising aspects highlighted in the introduction of PISCES is the potential to enhance liquidity within capital markets by de-regulating fragmented local pension schemes. This approach has proven to be a highly effective tool in other jurisdictions, driving growth and providing more robust market dynamics. Encouraging a similar transformation could yield significant economic benefits.”

Source: Manx Financial Group