From Red Tape to Precision Tools
For years, the UK’s investment firms have been navigating a regulatory landscape better suited to banks. Now, the Financial Conduct Authority (FCA) wants to redraw the map. The recent consultation to overhaul capital adequacy rules—originally built into MiFID II—marks a pivotal moment. The headline? A 70% cut in red tape. The subtext? A deeper rethink of what financial resilience should look like in a market that’s anything but static.
The change isn’t cosmetic. Many of the current requirements, as the FCA points out, were never tailored for asset managers or smaller investment firms. They were engineered in Brussels, for institutions with entirely different risk profiles. Simon Walls, interim executive director of markets, says the goal is “proportionate, effective regulation,” but the real ambition is greater: to make London a faster, sharper financial hub post-Brexit.
This ambition threads through a series of other FCA moves. Take PISCES, a new trading platform that might finally unlock UK private markets for institutional capital—without the full weight of public listing requirements. Or the upcoming cryptoasset regime, which pulls trading platforms under the same kind of disclosure and market abuse frameworks used in traditional finance. Here, the message is clear: legitimacy comes from transparency, not deregulation.
Still, these proposals come with friction. Some market participants remain wary of removing certain pre-trade requirements from the consolidated tape—arguing it could distort price discovery. Others question whether a simplified consumer disclosure framework will truly serve retail investors better, or simply shift more responsibility onto them in the fine print.
Trust Through Transparency
Then there’s the ESG shakeup. In an era when every fund wants to wear a green label, the FCA’s anti-greenwashing rule has teeth. It forces firms to prove their sustainability claims with hard data and consistent language. ESG ambitions, meet regulatory discipline.
At the heart of all this is a more nuanced philosophy of oversight. Regulation, done well, doesn’t stifle innovation—it sets the ground rules for trust. By making rules more targeted and removing layers of duplication, the FCA is betting that firms will focus more on performance and client outcomes, and less on compliance theatre.
But this isn’t a deregulation story. It’s a story about recalibration. And in volatile markets, clarity is not just a convenience. It’s a competitive advantage.