The FCA has tried to be helpful with the Guidance (PS23/11). In particular, the regulator has provided additional colour that will be useful for voice brokers, technology providers, crowdfunding platforms, and firms operating bulletin boards.

The FCA is keen to encourage innovation and create a rules landscape where the UK can be competitive – particularly in contrast with the EU and ESMA’s equivalent guidance on this topic. On the other hand, the FCA needed to weigh its words carefully as the exchanges will have wanted it to ensure there is a level playing field for all firms providing similar services.

The FCA Guidance was not intended to extend the scope of the trading venue perimeter, rather to publicly clarify the FCA’s views. Considering the shape of the final Guidance, it is not expected to result in a rush of platforms and technology providers seeking authorisation as trading venues.

Confidence to operate in the UK

Rather than potentially leading to more platforms and arranging firms needing to seek authorisation, this Guidance should give them greater confidence to offer their services in the UK. This will always be an area where firms need to consider their business models in detail and exercise judgement. But it is useful to have had the consultation process to get a better insight into the view the FCA would likely take on a particular business model.

For example, the FCA has specifically clarified that primary market activity by crowdfunding platforms (ie new issues of shares and debt) does not amount to operating a trading venue. Similarly, the FCA has provided further colour on its long-standing view that bulletin boards are not in scope.

Platforms should not need to be authorised as trading venues, provided they structure their businesses appropriately and provide investors access to the boarder financial markets.

Role of technology providers

Technology providers have an increasingly important role to play as the UK’s financial markets continue to digitalise. Both the buy-side and sell-side are reliant on third party technology providers to connect them to global pools of liquidity in an increasing range of asset classes. Digital assets are an area ripe for challengers and disruption because the established institutions will not necessarily have relationships with the digital asset exchanges or custodians. New trading venues and technology providers are emerging and will continue to emerge in this space.

GRIP has produced an article with tables comparing perimeter trading guidance issued by the FCA and ESMA – Regulators try to shore up trading venue perimeter.

For a more detailed analysis of Policy Statement (PS23/11), see the CMS article on the UK regulatory perimeter connected to trading venues.

Tom Callaby is a financial services partner with law firm CMS.