The Chancellor unveiled bold new proposals to help fintech scale up and keep the UK at the forefront of financial digitalization on 19 April 2021. To fuel development, the FCA has created a new ‘scale box’ and a Centre for Finance, Innovation, and Technology. With a central bank digital currency task force and funding for emerging technology and infrastructures, the UK will lead the way in digitizing finance. Additional capital market reform proposals were made to improve a transparent and dynamic financial center.
Chancellor Rishi Sunak announced plans to boost the UK’s strategic edge in fintech, ranging from regulatory support and legislation to help companies expand, to a new task force to lead the UK’s work on a central bank digital currency, during Fintech Week. Building on the prospects created by the UK’s exit from the EU, the Chancellor announced that the UK will implement many of the recommendations made by Ron Kalifa’s Fintech Review and Lord Hill’s Listing Review.
Rishi Sunak, the Chancellor of the Exchequer, stated that the government’s vision is for a more transparent, environmentally friendly, and technologically advanced financial services market. The United Kingdom is still recognized for being a leader in creativity, but it must go much further. The measures they’ve presented today are designed to help growing fintech expand the limits of digital finance and improve the efficiency of capital markets.
Supporting the Fintech Hubs
The Financial Conduct Authority (FCA) will propose a “size box” which is a set of steps to improve its pioneering regulatory sandbox, which has been useful for helping start-ups to test novel propositions, and to include a one-stop-shop for growth-stage companies in order to assist fintech firms in scaling up. It will also launch the second phase of its Digital Sandbox, which will enable companies to test ideas that address sustainability and climate change-related issues, assisting in the development of a greener finance system that will aid in the transformation to net zero.
The Chancellor also expressed support for the establishment of an industry-led Centre for Finance, Innovation, and Technology (CFIT) and pledged to collaborate with regional and national fintech organizations to make it a possibility. In order to promote fintech development across the UK, the CFIT will collaborate closely with regional hubs to recognize and resolve business challenges, as well as creating a competitive and fair environment for the financial industries, more specifically, either for the Forex brokers in UK or crypto brokerage companies to operate on the market. These policies expand on Budget 2021 announcements to help fintech companies find the talent they need, including a new ‘scale up’ visa pipeline that allows qualified people with a work opportunity at a recognized UK ‘scale up’ to apply for a fast-track visa without the need for funding or third-party endorsement.
Boundaries of Digital Finance
The Chancellor has announced new measures to keep the UK at the forefront of financial services digitization. A new Task Force will be created, bringing together HM Treasury and the Bank of England, to investigate the possibility of a digital currency issued by the UK central bank. In addition, two additional forums will be formed to include technical expertise and key stakeholders in the process.
Firms researching ways to leverage technology like a distributed ledger to develop financial system architecture would have access to a new sandbox to promote private sector innovation. The FCA’s sandbox will serve as inspiration for this new regime, and HM Treasury will collaborate with the Bank of England and the FCA to implement it. In addition, the Bank of England has unveiled a new ‘omnibus’ account to provide creative financial market infrastructure providers access to central bank money to enable distribution of quicker, easier, 24-hour wholesale payment and settlement.
Reforms to Listing and Capital Markets Rules
The Chancellor announced how the Government would implement all of the suggestions made by the Listing Review, providing another boost to ambitious businesses looking to raise capital in the UK. As part of this, the UK will work this summer on revisions to its prospectus regime, which controls the details a firm must disclose when raising capital, to ensure that the regulations are not excessively burdensome and that investors get the details they need, customized to the type of transaction.
The consultation would also look at ways to make it possible for businesses to have the forward-looking financial details that investors want to see, which will be especially beneficial to high-growth technology and life sciences companies and their investors. As suggested by the Review, a panel of experts will be assembled to examine ways to increase the quality of rights problems where a publicly-traded corporation asks current owners to buy additional new stock and the role technology might play in streamlining the process.
Separately, ambitious changes to the UK’s broader financial markets system, including plans to eliminate the equity exchange duty and impose a double volume limit, would be briefed on this summer. The consultation process seeks to produce a rulebook that is fair, results-driven, and competitive, while also ensuring that the UK achieves the highest regulatory expectations.