(Bloomberg) -- The UK could allow easier market access for specialist trading houses that don’t hold retail deposits, the head of the Financial Conduct Authority said on Tuesday.
The regulator is exploring adjustments that could encourage wholesale trading and boost liquidity, according Nikhil Rathi’s published speech for the FCA’s international markets conference in London.
“We know custom rules can work,” he said. “And can free up capital, and new entrants. Tailored regulation for these specialised firms sparks growth and competitiveness, while protecting market integrity.”
Rathi pointed to how non-bank traders have expanded in US equities. High-tech market-makers such as Jane Street Group LLC and Citadel Securities LLC have grown rapidly across a plethora of asset classes, muscling in on Wall Street’s trading businesses and generating tens of billions a year in revenue.
“The goal of regulation shouldn’t just be to step in when things go wrong, or respond to a crisis,” Rathi said. “We want to deliberately create an environment that helps firms compete and grow.”
Rathi also confirmed the FCA intends to let companies that are already listed raise a further 75% of their share capital without filing paperwork known as a prospectus. The watchdog also wants to make it easier for firms raising money to give forward-looking information to potential investors.
These comments echo proposals set out in July, which the FCA hopes will deliver a long-awaited boost to activity on the London stock markets.
London’s reputation as a listing destination has suffered as several firms — including CRH Plc, Flutter Entertainment Plc and Arm Holdings Plc — opted for New York, which offers a deeper pool of investors.
(Updates with full details of speech throughout.)
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