Markets never stand still and regulators need to play their part in helping them evolve. That was the message from Sarah Pritchard, the FCA’s Executive Director of Markets and International, when she spoke at the launch of the Capital Markets Insights conference held by EY and UK Finance last week.

Pritchard devoted some time to setting out the changes the UK needs to make in a new, post-Brexit, environment and in facing up to the challenge posed by the regulatory regime in the US.

She said the City of London still had a unique position “as a ‘full-service’ global wholesale market, with an integrated deep and broad ecosystem of expertise across banking, insurance, investment, accounting, legal services, and related services”. And she emphasised the deep links between financial services and tech.

The UK’s strengths were identified as;

• being first in the world for international debt issuance;  
• a position as the largest centre for commercial insurance; 
• being number one for foreign exchange trading;  
• status as the second biggest global financial hub, behind only the US.

But she said that, despite UK investment managers running £11trn ($14trn) in assets, there had been “a significant drop” in the number of listed companies since 2008, and a loss of market share to emerging powerhouses India and China. She also contrasted the 10.6% of financial assets held in equity by UK households with the figure of over 36% in the US.

“Regulation is one of the factors firms take into account when deciding where to list. However, access to capital and investor perceptions are often bigger priorities.”

Sarah Pritchard, Executive Director of Markets and International, FCA

The Insights Report, said Pritchard, “shows that regulation is one of the factors firms take into account when deciding where to list. However, access to capital and investor perceptions are often bigger priorities”. To this end: “We want to make the listing regime more accessible, effective, easier to understand and more competitive.”

Pritchard spoke positively about initial responses to the FCA consultation on reform of the listings regime, saying: “We think there is a strong and pressing case for change to refocus UK listed markets, but we want and encourage further views and evidence on the blueprint we have set out.”

Innovation

She promised to “innovate” in the way the regulator engages with stakeholders, highlighting an increased emphasis on forums to actively discuss proposals rather than simply issuing consultation papers and asking for formal responses. Discussion, she thinks, could prove to a more agile and practical method of developing policy. We can, it seems, expect more workshops, policy sprints and live events as the FCA seeks to become “more data driven and outcomes focused”.

A 60% reduction in pending caseload was given as an example of improved operational efficiency at the regulator, and Pritchard said the aim was to improve operational efficiency so that the FCA was “making proportionate regulation, and increasing trust, effective competition and innovation in stable and international markets”.

The full text of the speech is available on the FCA website.