UK Deregulation: FCA's Simon Walls on a 'Golden Age' for the City

Reforms to UK Capital Markets

• 💡 The UK is introducing reforms, dubbed POATRA, to cut red tape and make capital markets more competitive.
• 📈 Changes include increasing the threshold for issuing new prospectuses for listed companies from 20% to 75%, making it cheaper and quicker to raise capital.
• 💰 Restrictions on issuing debt in denominations below £100,000 have been removed, aiming to simplify participation for retail investors in bonds, potentially from as little as £1.

FCA's Reform Program

• 🎯 The FCA is halfway through an ambitious reform program focused on replacing preemptive regulatory checks with disclosures where appropriate.
• 📊 Success metrics for these changes include the speed at which companies can raise money and the attractiveness of the UK for listings and capital raising.
• ⚙️ The overarching goal is to ensure regulation serves as an asset to the UK's financial markets rather than a hindrance.

Navigating Increased Risk and Retail Participation

• ⚠️ The FCA acknowledges a shift towards optimizing risk rather than solely reducing it, but emphasizes the need for societal appetite for potential losses.
• 📈 Supporting greater retail participation in capital markets requires accepting that investors may sometimes lose money, a long-term perspective.
• ⚖️ The FCA aims to bridge the gap between full financial advice and current retail investor support, acknowledging that reforms have downsides that need to be managed.

Private Markets and Retail Investment

• private markets are booming, offering good returns but characterized by reduced liquidity and less frequent valuations.
• 🧩 A new public offer platform is being introduced to provide a structure for private companies raising over £5 million, with added due diligence for retail investors.
• 🏦 While not averse to retail investment in private markets, the FCA stresses the importance of responsible approaches, such as through long-term asset funds, and cautions against misusing terms like 'democratization' without preserving the essential features of private markets.