HM Treasury sets out direction of travel on UK Wholesale Markets regulation

There is always a level of anticipation on the day when a government department is expected to announce the outcome of a significant consultation.

There is always a level of anticipation on the day when a government department is expected to announce the outcome of a significant consultation.

Tuesday 1 March was no different, as HM Treasury (HMT) published the outcome and next steps of its landmark Wholesale Markets Review initiative, much of which focuses on the reform of the recently onshored UK MiFID/R framework. That feeling of anticipation was arguably heightened given the ambition and willingness this government has shown in wanting to optimise capital markets regulation in the UK.

We were pleased to see many of UK Finance's recommendations and policy proposals carried forward. There were no curveballs nor surprises (which the cynics among us may have been scanning for). Instead, HMT has set out a clear path forward and we believe that when taken together, this package of reforms will create a simpler, agile and less prescriptive regulatory regime and contribute to the UK's international competitiveness.

The key outcomes

If you have yet to pour over the details of the 49-page outcome, the main takeaway is that the most burdensome and unnecessary regulatory requirements within the current regime will be removed as soon as possible. A selection of the key outcomes include:

  • confirmation that the share trading obligation (STO) and the double volume cap (DVC) will be removed
  • confirmation that systematic internalisers (SIs) will be allowed to cross at the mid-point, subject to complying with best execution obligations
  • confirmation that the counterparty scope of the DTO and clearing obligation will be aligned and post trade risk reduction services will be exempt from the DTO and the clearing obligation.

Furthermore, it was encouraging to hear the ambition and eagerness in the remarks given by economic secretary to the Treasury, John Glen MP as he affirmed his commitment to championing positive change in the sector. The City minister emphasised in his speech the extent to which wholesale markets are an integral driver of the UK economy, and that maintaining openness is a key hallmark of the UK's financial services identity.

Capital markets are inherently global and many of our members operate across multiple jurisdictions, so it was also reassuring to hear that HMT is cooperating closely with its European counterparts as the EU also considers changes to its EU MiFID/R framework.

What happens next?

How will these changes be implemented and how soon will this happen?

Where legislative changes are needed and are of priority, these will be taken forward as soon as Parliamentary time allows (eg:. the removal of STO and the DVC). 

Where legislative changes are needed but swift implementation is not necessarily required, then the government will wait until the culmination of the Future Regulatory Framework (FRF) Review to bring these forward (eg:. removing matched principal trading restrictions on MTFs).

Finally, where changes do not need to be made to primary legislation - because the respective rules sit within regulatory guidance and technical standards -  these will be taken forward by the Financial Conduct Authority (FCA) in line with its normal processes.

In this context, we look forward to convening members in responding to the two consultations the FCA is expected to publish this year, one in spring and one later in on the summer, as set out in its most recent Regulatory Initiatives Grid.

A busy year lies ahead, and we are excited to continue working with our members, policymakers and the regulatory authorities to support the evolution of a dynamic, forward-looking and globally competitive capital markets regime in the UK. For more information on our work in this space, please contact


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