FCA Chair Highlights Global Cooperation in Financial Regulation

In a recent speech, the Chair of the UK's Financial Conduct Authority (FCA), Ashley Alder, emphasized the importance of international cooperation in addressing global financial challenges and opportunities. The speech, delivered at Eurofi, outlined the FCA's commitment to working alongside EU and global partners to promote sustainable economic prosperity while addressing common risks in the financial sector.

Alder, who previously served as Chair of the International Organisation of Securities Commissions (IOSCO) Board and CEO of Hong Kong's markets regulator, highlighted the need for increased international cooperation in light of the evolving challenges faced by financial regulators, particularly in the era of artificial intelligence (AI).

One of the key developments mentioned in the speech was the signing of the UK-EU Memorandum of Understanding on Regulatory Cooperation in Financial Services. This agreement aims to foster a constructive relationship given the substantial interconnectivity between the EU and UK financial services sectors. Approximately £2.4 trillion of assets are still overseen by UK-based investment managers on behalf of EU clients, underscoring the importance of effective cooperation.

The speech also touched upon several global cooperation initiatives in which the FCA plays a pivotal role. These include efforts to strengthen the regulatory framework for sustainable finance, with a focus on sustainability-related reporting standards at the real economy level. The FCA welcomed the recent endorsement of climate reporting standards by the International Sustainability Standards Board and expressed its commitment to promoting these standards across international capital markets.

In the realm of cryptocurrency, the Chair highlighted the need for international coordination, as crypto businesses often transcend national borders. The FCA has been leading efforts within IOSCO to develop global standards for crypto and digital assets, recognizing the importance of addressing risks in this sector collectively.

On the broader financial stability front, the Chair emphasized the value of close cooperation among regulators and market participants, especially in non-bank financial intermediation (NBFI). Lessons learned from recent episodes of dysfunction, such as the Archegos default and issues in opaque markets, underscored the need for data sharing and cooperation. The FCA is actively involved in developing NBFI policy proposals in collaboration with European partners and international organizations.

Shifting to domestic matters, the Chair discussed the significant regulatory reform agenda underway in the UK. The Financial Services and Markets Act, passed in July, will reshape the FCA's remit and involve a multi-year effort to tailor financial services regulation to UK markets. The FCA aims to establish an agile and coherent UK financial services regime that encourages investment and aligns with the changing needs of firms, markets, and consumers. Alder emphasized the importance of effective international collaboration in this regulatory reform process, ensuring that the reforms are proportionate and promote strong global regulatory standards.

Alder reiterated the commitment to maintaining open and effective UK markets grounded in world-leading standards. The FCA seeks to encourage efficient international investment flows through close cooperation, ultimately benefiting both EU and UK businesses.