WG-REQ-1670 FIS Horizons 2025 STAGE 1 AH - copy - Flipbook - Page 11
Hogan Lovells
The position of the regulators themselves is a renewed
area of focus. There is an increasing sense that the desire
of regulators to control risks and prevent the recurrence
of past crises has placed disproportionate burdens
on the industry or is stifling innovation and growth,
a sentiment most notably seen from policymakers in
the U.S. Governments are increasingly encouraging
their regulators to be mindful of the need to support
innovation and competitiveness. In the UK, the
regulators are now under a legal obligation to support
the international competitiveness and growth of the UK
economy (but as a secondary objective, and subject to
their primary objectives – such as protecting the integrity
of the UK financial system). Balancing these objectives
will be a considerable challenge for the regulators.
While much of the world considers deregulation policies,
the EU has driven ahead with new regulations, including
the AI Act, Digital Operational Resilience Act, and
Markets in Crypto-Assets Regulation, all of which have
received mixed reviews from industry, whether or not
based in the EU. The EU is now embarking on a major
‘simplification program’, aimed at reducing 25-35% of
regulatory burdens.
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There is also a focus on ensuring that the authorities
have the right tools to enable them to respond rapidly to
change. In 2024, the UK launched its Digital Securities
Sandbox, which will allow the UK authorities to create
temporary regulatory regimes in order to support
innovative developments in the digital markets space. As
part of the sandbox arrangements, the UK authorities will
have the power to amend existing law in order to support
these developments, which will allow them to address
any existing legal barriers to innovation without having
to go back to Parliament and seek changes to existing
legislation. The main example of a sandbox initiative
that we can expect to see in 2025 is the creation of the
‘PISCES’ sandbox, which will allow the creation of a new
type of trading platform that will enable the intermittent
trading of private company shares on a secondary
market, and which can be supported by existing financial
markets infrastructure. The FCA is currently consulting
on its rules for PISCES. The UK Government will also be
looking for other opportunities to support innovation
using the sandbox powers.
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