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Rachel Reeves has promised to scrap “duplicative and unnecessary” reporting requirements for financial services companies by rewriting laws inherited from the EU.
After a meeting with chief executives of UK fintech companies on Tuesday, the chancellor said the Treasury was working on legislation to ease the rules on how much data companies have to provide to the Financial Conduct Authority.
The move comes as part of a wider initiative by the chancellor to streamline City regulation to boost capital markets.
Financial services, which Reeves has called the “crown jewels” of the British economy, are one of eight sectors with high growth potential being promoted by the government as part of its industrial strategy.
The Treasury said the new legislation would enable the FCA “to scrap any rules which are duplicative and unnecessarily hold UK firms back by designing a new regulatory framework that supports economic growth”.
City of London companies often complain about the amount of data they have to report to regulators, some of which they believe is redundant. Trade body UK Finance has said the FCA should be “bold” in reducing the burden of data reporting and suggested derivatives traded “over-the-counter” between financial groups could be excluded from the rules.
The FCA published a discussion paper last November on the potential to “improve the quality of data reported to us and reduce reporting burdens on market participants”.
The watchdog receives more than 7bn reports on financial market transactions every year, under the Markets in Financial Instruments Directive (Mifid) rules it inherited from the EU in 2018.
The rules require financial market participants to report on transactions in more than 20mn different instruments, such as bonds, shares and derivatives.
The FCA said last year it was planning to consult on “a new transaction reporting regime that will remove unnecessary burdens for firms while maintaining the high regulatory standards our markets are renowned for”.
The regulator said it would consider removing or amending some of the fields and processes that companies have to complete in the transaction reporting regime “that may present a disproportionate cost relative to our use of the data”.
It also plans examine ways to facilitate the use of technology, such as artificial intelligence, to improve efficiency.
At the chancellor’s meeting with fintech bosses from companies including Revolut, Stripe and Wise they discussed ways to bolster growth in the sector. Revolut UK chief executive Francesca Carlesi said: “It is encouraging to see the UK government taking decisive steps to cement the UK’s reputation as a global fintech leader.”
The government said it would push on with developing digital versions of gilts, which proponents argue are a more modern and efficient way to trade assets. However, critics point out that blockchains can be expensive to use in busy periods and rely on the goodwill of developers to maintain them.
Additional reporting by Akila Quinio.
