FX friendly Britain! FCA to lower regs post-Brexit
FCA CEO says “Left to our own devices, the UK would construct financial conduct regulation in a rather different way” as the scourge of socialism is jetisoned and FX can flourish
The anti-capitalist European Commission has had a stranglehold over British business and politics for decades, becoming noticeably more intrusive since the Labour party came to Parliament in 1997.
Whilst the UK had been a member of the European Union and common market since 1973, Baroness Margaret Thatcher’s Euro-sceptic free market conservatism kept the wolf from the door for over twenty years, allowing the UK’s capital markets and free, diversified economy to flourish unhindered by socialists from the vast governments of the continental mainland.
1997 was, however, a pivotal time for the retail FX and CFD business in the UK, as London had already established itself as the absolute global center for prime brokerage, and had become home to two very large, domestic market-focused CFD providers which are now at the very top of the retail sector, those being CMC Markets and IG Group.
Several quality firms followed suit, however the entire growth of the retail sector in Britain took place under a business unfriendly socialist government, ruled not only from within 10 Downing Street, but by unelected pen pushers in Brussels, notorious for disliking the financial services industry.
The modern European version of socialism favors two environments, those being large public sector and state owned entities, ranging from massive and inefficient government departments to partly or fully state owned giant corporations that have trade union subservience and compulsory membership ingrained into their fabric.
Both are juggernauts, unable to modernize, and house a belligerent workforce who know their rights but not their responsibilities. Anyone who has ever driven a Fiat or a Renault would be au fait with the product of government interference in large business.
The UK’s free market differs tremendously, and has ever since the industrial revolution been home to entrepreneurship and free thought, hence the massively developed and sophisticated financial technology sector which powers not only London but the whole of Europe, from just one square mile.
The European Commission’s method of attempting to clip London’s eagle-like wings has been via dramatic regulation, ranging from ESMA’s leverage restrictions to total curtailing of how CFD products – a mainstay of British trading – are marketed and sold to domestic customers.
This Channel-crossing assault on London’s sensibilities is about to come to a halt as abrupt as that of the Greek economy, as Britain has some very FX industry friendly plans post Brexit, when the worlds most important financial center and 5th largest global economy gets its own decision making powers back.
FCA CEO Andrew Bailey, one of the candidates that had been put forward for the soon to be vacant Governor of the Bank of England position, has highlighted this morning what he considers to be his plans for a lower burden approach to financial regulation in the UK once the UK is out of the European Union.
Setting out his vision for “the future of financial conduct regulation” in London, Mr Bailey said Brexit “will be a defining factor” in the construction of a post-EU regulatory regime and the FCA’s approach. Mr Bailey explained that “left to our own devices, the UK regulatory system would evolve somewhat differently” to that of the EU regime, with the country’s regulators emphasising “principles” gained from “practical experience”, over “detailed rules that can tend to become overly set in stone”.
He gave the example of the trading obligation rule in EU law, which he said he “simply fail[s] to understand why we need such a rule when there is a well-established principle that firms must obtain best execution for their clients”.
The European Union would not be able to implement its ghastly Tobin Tax on financial transactions, which it has done successfully in several EU nations, all of which have absolutely no financial markets economy at all.
Mr Bailey said “Taking the lessons of experience, I think it is safe to say there are things we would have done differently with EU rules if we had developed them unilaterally, but where we compromised to ensure a level playing field across the EU and through cooperating closely with our counterparts, but where we have generally not differed is in our agreement on the objectives we want to achieve, which will not change with Brexit.”
“I see rules as a means to deliver outcomes, and it is important not to focus too much on rules as the beginning and end of the process of regulation. Outcomes matter at the end of the day.”
However, he further commented that any change in approach to regulation would not seek to completely scrap existing rules and the regulator “would continue to look to improve onshored EU legislation on a ‘same outcome, lower burden’ basis”.
Mr Bailey said this will determine the FCA’s continued cooperation with the EU and its regulators as “our markets will remain closely linked and our close cooperation with our EU counterparts in order to meet our objectives will continue after exit. Brexit will clearly be a defining factor. I do think that, left to our own devices, the UK, with its common law system and large, global financial markets, would construct financial conduct regulation in a rather different way. To be clear, that is not a comment on the level of regulation, but rather the approach and the means, and, to be very clear, it does not involve taking a position on Brexit.”
Given that London is now unshakable as the number 1 financial markets capital, this is a great time to either cherish your existing FCA license, or take the steps to acquire one.