The UK’s Financial Conduct Authority’s (FCA) guidance on the trading venue perimeter has come into force following a consultation with stakeholders.
In September 2022, as part of the Wholesale Markets Review (WMR), the FCA consulted on providing new guidance on the regulatory perimeter for trading venues.
The new guidance takes the form of Questions and Answers (Q&As), in Chapter 13 of the Perimeter Guidance manual (PERG) of the FCA’s handbook on the definition of a multilateral system.
It also sets aside the European Securities and Markets Authority’s (ESMA) market structures Q&As dealing with the trading venue perimeter post-Brexit and updates the definition of a company that will fall under the guidance’s remit.
The FCA said further clarity about the perimeter will provide greater certainty to firms about their regulatory status and also help to promote “a level playing field”, while allowing firms to innovate and develop new technologies.
The FCA’s four-pronged definition of a multilateral system, which falls under the remit of the guidance, is a system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system, and comprises each of the following main elements: it has the characteristics of a trading system or facility; it comprises multiple third-party buying and selling trading interests; it allows trading interests to interact in the system; and those trading interests are in financial instruments.
But which firms will move to license their trading activities, and how will the new guidance impact those already regulated? Check out the upcoming Autumn edition of BEST EXECUTION magazine for a deep dive into this controversial issue.
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