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Fair and Effective Financial Markets Review: taking another look

Although George Osborne’s annual Mansion House speech was dominated by plans to tackle the UK’s chronic housing shortage, the Chancellor made some familiar noises concerning the importance of the ‘integrity of the City,’ and ‘robust financial markets,’ and set out proposals to protect both.

Osborne announced that the Treasury, the Bank of England and the FCA – led by newly minted Deputy Governor of the Bank of England, Minouche Shafik – will conduct a Fair and Effective Financial Markets Review. Tasked with assessing both regulated and unregulated wholesale markets – fixed income, currency and commodities, including associated derivatives and benchmarks – the scope of the review covers trading practices, regulation, and supervision measures.

Significantly, according to the terms of reference, the review will consider how best to regulate currently unregulated markets (such as FX and precious metals), and which benchmarks should be brought into the scope of existing UK regulation. Furthermore, the review will consider if current EU regulatory frameworks, such as MiFID II and MAR sufficiently address ‘areas of concern,’ potentially leading to a spate of new UK regulation.

A consultation document will be published in Autumn 2014, with a final report published by June 2015.

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