Chancellor’s Ambitious Proposal To Expand UK Fintech And Financial Services

On April 19, 2021, the Chancellor of the UK, made an initiative to create a new proposal to provide the fintech companies and firms with the proper financial or regulatory framework in order to increase their involvement in the global financial market, through promoting the digitization of the process.  Chancellor Rishi Sunak announced at the conference the steps that the UK government should take in order to provide the companies not only with regulatory assistance but help them to develop their enterprises. The new opportunities were created after finalizing the Brexit deal, which has also impacted and changed the industrial agenda in the country.

Support for the firms and fintech hubs

After the announcement of Chancellor Sunak, the Financial Conduct Authority expresses the readiness to create a new regulatory sandbox, which will be an abreast version of the old, well-tried framework, and there are a lot of expectations about its effectiveness to increase the efficiency of the fintech firms in the country. The main purpose of the new digital sandbox will be to allow the companies to test their innovations regarding the sustainability and issues that are related to climate change, in order to create something that will help them to develop a greener financial industry.

The Chancellor also supported the plan of the establishment of an industry-led Center for Fiance, Innovation and Technology which is also known as the CFIT, that is planning to establish the cooperation between local and international firms that are operating in the industry and enhance the engagement in the whole field. Cooperation with the regional centers will be extremely important and helpful for creating the best solutions to the industrial concerns in the country and eliminating them.

The above-mentioned initiative creates the best opportunity especially for the firms that are operating in the financial industries such as foreign exchange, stocks, or crypto. Beforehand, the FCA regulations of the companies that were assisting the clients with the proper services were burdensome and there is a list of best Forex brokers who are operating in other countries and regions, but the UK regulatory framework was not allowing them to conduct the beneficial activities. However, the new initiatives are going to make changes in their activities as well.

One of the most important initiatives in this regard is to make the changes in the visa procedures, to make it easier for the talented people in the field to start working in the UK established firms, for which they need for the fast-track visa is crucial.

Pushing the boundaries of digital finance

Other than the steps that were mentioned above, the chancellor has made several other important implications. A new task force initiative will bring together HM treasury and the Bank of England, in order to investigate the possibility of a digital currency issued by the UK central bank. Two new forums will be developed to involve technical experts and important stakeholders in the process. Another initiative is to boost the sandbox of the private sector for which the main solution appears to be the massive implementation of the leverage technologies in the industry, which will directly improve the financial infrastructure in the country.

The FCA’s sandbox will be used as an example for this new system and for this it is important the  HM Treasury collaborate with the Bank of England and the FCA to make the proper implementation of the innovation. In addition, the Bank of England has opened a new omnibus, to provide innovative financial market infrastructure companies access to central bank money to promote the implementation of quicker, cheaper payments processes.

Reforms for the capital market

The chancellor also emphasized what steps the Government will take to implement all of the suggestions that were made by the Listing Review, providing another support system to the creative firms that are looking to settle in the UK.  As part of this, the UK will consult changes this summer,  to its prospectus regime, which will create the draft information about the details that the company must publish when raising capital, to make sure and double-check that the rules are not overly burdensome and that investors receive the information they require.

The consultation will also consult the issues such as what the investors want to see to make it easier for the companies to give forward-looking financial information, which would be especially efficient to life science business and high-growth technology and those who want to invest in it. As proposed by the Review a panel of experts will be created to examine ways to enhance the efficiency of rights issues when a publicly-traded firm asks current shareholders to acquire extra new shares and the role of technology may plan in speeding the process.

Separately, ambitious reforms to the UK’S broader capital markets framework including suggestions to eliminate the share trading obligation and impose a double volume limitation will be consulted this summer. The consultation process seeks to create a  proper regulatory framework that will be efficient for the companies to use, as well as being results-driven and competitive while also making sure that the UK maintains the high standards of the regulatory framework.