HM Treasury has published a
letter, dated 1 July, from the Chancellor of the Exchequer to the governor of the Bank of England (BoE) setting out the government's recommendations to the BoE's Financial Market Infrastructure Committee (FMIC). Noting the BoE's primary objective of protecting and enhancing UK financial stability, and as regulator of central counterparties (CCPs) and central securities depositories (CSDs), its secondary objective of facilitating innovation, the Chancellor states that the BoE should engage constructively with incumbent and new entrant financial market infrastructures (FMIs) to encourage responsible innovation, provided it aligns with regulatory objectives, and actively facilitate innovation across the BoE's policymaking. The BoE should also ensure that the regulatory burden on firms is rationalised to enable FMIs to offer new products and services without lowering regulatory standards, including as the regulatory framework for FMIs is updated (for example, the latest proposed updates to the
CCP regulatory regime). In addition, the UK must continue to engage effectively in international forums. The FMIC must respond to the recommendations within a year, setting out the actions taken or reasons for not taking certain steps.
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