Following this, the UK’s Financial Conduct Authority (FCA) has welcomed the recommendations, alongside the Government and the Bank of England.   

The FCA stated that it supports the transition to T+1 settlement in UK markets and calls on the industry to engage and start planning as soon as possible.   

“We highlighted how the move to T+1 will make our markets more efficient and support growth in our recent letter to the Prime Minister. We will support industry as they move to T+1 and expect firms to engage and plan early,” said Nikhil Rathi, chief executive at the FCA. 

The plan published by the AST includes a Code of Conduct for market participants, confirming that 11 October 2027 will be the first trading date in UK cash equities for settlement on a T+1 cycle; aligning with the European Union and Switzerland.  

Elsewhere in its report, the AST included five behavioural commitments including a push for automation in SSIs, corporate actions, stock lending recalls, and a focus on ‘action this day’ urging firms to begin planning and where practicable, immediate implementation.  

Read more: UK taskforce publishes blueprint for T+1 transition  

At the time of publication of the report, Andrew Douglas, chair of the UK T+1 AST, said: “This is a milestone in the UK’s journey to T+1 settlement and reflects a substantial amount of work and co-operation across the industry.  

“We have a date and a detailed plan for the way ahead. Market participants should start planning now ahead of the 2025 budget process for project funding in 2026.  Automation will be a key component of a successful implementation.”  

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The dealer rule, introduced in February 2024, required certain hedge funds, among other market participants, to register if they met one of two qualitative standards.

Specifically, the adopted rules meant that an entity would qualify as a dealer or government securities dealer if they regularly express trading interest as close to the best price on both sides of the market for the same security or earn revenue primarily from capturing bid-ask spreads or from capturing incentives offered by trading venues.

If applicable, the new rule would have meant that market participants would have to register with the commission, become members of a self-regulatory organisation (SRO), and comply with federal securities laws and regulatory obligations.

The SEC’s decision to readjust the established rules was met with uproar from the industry, with various groups and entities criticising the change and proactively working to undo the dealer rule.

Read more: Trade associations file joint lawsuit to oppose SEC dealer rule

Following this outrage, one group of digital asset firms in the US filed a complaint for declaratory and injunctive relief in Texas on 23 April 2024, specifically against the SEC and Gary Gensler himself. 

The official complaint document highlighted that participants from across the digital assets industry had “expressly warned” the regulator of potential harm to the industry as a result of these rules.

This included “stifling markets’ innovative methods for generating liquidity, increasing costs, decreasing access and competition, and even driving many participants from the market altogether,” said the complaint.

The US district court for the Northern Texas district subsequently ruled that the dealer rule should be vacated, highlighting that congress had defined the term ‘dealer’ “against a pre-existing historical backdrop […] indicative of an understanding that dealers have customers”.

The appeal to this decision, made last month (17 January), was one of the last actions taken by Gary Gensler’s SEC administration. However, the new guard – led by Mark Uyeda, interim chair – has been quick to prioritise reversing this move.

Read more: SEC unveils new crypto task force as Uyeda appointed acting SEC chair

Industry groups across the industry have praised this latest move, with expectations high for next steps from the watchdog under the new leadership.

Speaking in an announcement today, Jack Inglis, chief executive of AIMA said that it “welcomed” the news that the watchdog was abandoning its appeal related to the “ill-advised” dealer rule.

He added: “Hedge funds managed by AIMA’s members are not dealers. They do not have customers – a requirement for determining whether a market participant is a dealer […] While today’s decision significantly reduces uncertainty and the potential for market disruption, we urge the Commission to review their existing enforcement practices with respect to the dealer definition so that they are consistent with the court’s ruling.”

The post New SEC administration withdraws dealer rule appeal appeared first on The TRADE.

Featured in its final report on equity transparency, published in December, the European Securities Markets Authority (ESMA) added an additional line to its text surrounding the specific characteristics of negotiated transactions, preventing exchanges from using the model on their own behalf.

“A negotiated transaction […] shall be considered to be a transaction which is negotiated privately without the assistance of a system or trading protocol operated by a trading venue,” said the watchdog in its findings.

Read more – Early bird catches the worm: A look at the race for first mover advantage in Europe’s emerging crossing network landscape

Speaking to The TRADE, sources familiar with the matter confirm that the changes were made last minute and without industry consultation.

ESMA declined to comment on the changes.

Trajectory crossing became a prominent topic throughout the industry for a short period last year, with a flurry of new venues planned to go live throughout the first half of 2025. In the last six months, Aquis, Cboe Europe and Nasdaq Europe have all confirmed plans to launch European trajectory crossing products using the negotiated transaction model.

Read more – Cboe Europe new VWAP crossing service to launch in Q4

However, ESMA’s recent decision has all but banned the offerings in Europe, roadblocking their broader plans and leaving the pan-European trading venues with their UK versions only.

Cboe’s UK VWAP-X service went live last year, however, its European counterpart was delayed to Q1 of this year due to regulatory hurdles.

“We’re disappointed by the recent ESMA proposal that could limit the availability of trajectory crossing within the EU venue ecosystem, to the disadvantage of EU-based investors and brokers,” Natan Tiefenbrun, president, North American and European equities, Cboe Global Markets, told The TRADE.

“Our focus is on growing the user base of this platform in the UK, which launched in Q4 2024, whilst continuing to engage with regulators as we seek ways to extend the service to include EU equities.”

Aquis Exchange’s new UK VWAP matching service is set to go live in the first quarter of this year, as revealed by The TRADE in December.

Speaking to The TRADE at the time, Aquis confirmed that the service had received a non-objection from the UK’s Financial Conduct Authority (FCA) and that it was in the process of working with regulators in Europe.

Read more – Aquis VWAP Match service set to go live in Q1

“The launch of Aquis VWAP Match (‘AVM’) is continuing as planned in the UK, and we are excited to bring this product to our UK members very soon,” a spokesperson from Aquis told The TRADE.

“We are continuing dialogue with our European regulators and, as always, maintain a suite of products to meet the trading needs of our members in line with jurisdictional regulation.”

Crossing services as a concept is not a novel one for Europe. Scrapped in 2018 under Mifid II, former broker crossing networks (BCNs) used a similar workflow. Prior to the regulatory change that banned the ‘venues’ among other market changes, many brokers would leverage their algo plant to do VWAP or trajectory crossing.

Given the regulatory changes brought in by ESMA in December, this flourishing landscape is set to look vastly more different in Europe than expected.

“This regulatory development presents challenges to our planned service launch in Q1 2025,” said Nasdaq in a statement. “We remain committed to providing PureStream to our clients and will continue our dialogue with the regulators as well as exploring alternative solutions to advance in this direction.”

The post ESMA thwarts European trajectory crossing plans with last minute rule change appeared first on The TRADE.

The case concerns Infinox Capital which has been fined £99,200 by the watchdog for failing to submit 46,053 transaction reports between 1 October 2022 and 31 March 2023.

This oversight “risked market abuse going undetected,” said the regulator, adding that “to monitor, detect and disrupt market abuse effectively, the FCA needs to receive complete, accurate and timely transaction reports.”

To date, the FCA has fined several firms for transaction reporting failures, including some of the biggest names in the industry. This instance, however, signals the beginning of the new era, wherein such breaches will be officially considered under the Mifir laws by the data-led regulator.

Read more: Transaction reporting errors surge amid pandemic for majority of firms, research finds 

Specifically, Infinox failed to submit transaction reports for single-stock contracts for difference trades executed through one of its corporate brokerage accounts over the five-month period, which reportedly accounted for the majority of this business line. 

The breach “highlighted weaknesses in Infinox’s transaction reporting systems and controls for a high-risk investment product,” said the FCA.

Infinox identified its failing following a third-party review, however the firm did not proactively report the breach to the watchdog – instead the regulator identified this discrepancy in transaction data submitted by Infinox itself. 

The breach highlighted weaknesses in Infinox’s transaction reporting systems and controls for a high-risk investment product.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “As a data-led regulator it is vital that firms submit accurate and timely transaction reports, and promptly bring any failures to our attention.

Infinox failed to do this, which meant market abuse could have flown under the radar and risked the integrity of the market.”

Smart added that the regulator’s specialist teams are constantly monitoring market data in real time in order to track indications of any misconduct.

The post FCA serves first fine for breach of transaction reporting requirements under Mifir appeared first on The TRADE.

The ‘delegated act on derivative identifiers’ highlights that this decision has been taken specifically to allow the European Securities and Markets Authority (ESMA) “enough time to specify how identifying reference data should be reported and for the necessary adjustments to IT systems”. 

The appointment of a single consolidated tape provider (CTP) specifically concerns OTC derivatives and relevant subclasses of OTC derivatives. 

In addition, Mifir states that OTC derivatives are subject to both pre- and post-trade transparency if they are denominated in euro, yen, dollars or sterling, among other factors.

Mifir also requires ESMA to initiate the selection procedure for the appointment of a single derivatives CTP no earlier than six months from the initiation of the selection procedure for the ETF tape provider.

The EC announcement confirmed that “the identifying reference data set out in this ‘delegated regulation’ should be used from 1 September 2026. Until then, OTC interest rate swaps and OTC credit default swaps should continue to be identified in accordance with the rules currently in place.”

Read more – Consolidated tape: Avoiding a ‘garbage in and garbage out exercise’

Some of the entities which have already confirmed plans to bid to become the fixed income consolidated tape provider are also considering participation in the derivatives tape tender, The TRADE can reveal. 

Etrading Software is preparing to participate in the derivatives tape tender, according to a social media announcement from Sassan Danesh, chief executive of Etrading Software. 

Furthermore, speaking to The TRADE, Vincent Grandjean, founder and chief executive of Propellant Digital, confirmed that Propellant “will certainly consider being involved,” citing the firm’s technology solution which “already supports for its clients the aggregation of derivatives data across the EU and the UK”.

“It’s another example of where we can take our experience and competencies and apply them to drive market transparency forward via the consolidated tapes,” added Neil Ryan, CEO-designate at Bondtape. 

Propellant and FINBOURNE are also involved in applications to become the bond CTP in both the UK and EU markets, as part of a joint initiative named ‘Bondtape’. 

In addition, Ediphy – also in the race for the EU fixed income consolidated tape provider as part of ‘fairCT’ – tells The TRADE: “At this stage [we] are monitoring the developments related to the EU derivatives tape”. 

The fairCT consortium is co-ordinated by Ediphy and consists of Google Cloud, UBS, TP ICAP, Cboe Global Markets, FactSet, and Norges Bank Investment Management.

The post European Commission sets date for derivatives consolidated tape tender appeared first on The TRADE.

The new governance structure has been developed to oversee and manage the operational, regulatory and technological elements of the transition.

Due to the ‘significant’ interconnectedness within the EU capital market, a coordinated approach across the EU, involving authorities, market participants, financial market infrastructures and investors, is desirable, according to the watchdogs.

Among the key elements the governance model seeks to establish is an industry committee, made up of senior leaders and representatives from market players.

This committee will be chaired by Giovanni Sabatini, who has previously served as a member of the European Economic and Social Committee and held roles within International Organisation of Securities Commissions (IOSCO), European Banking Federation (EBF) and European Central Securities Depositories Association (ECSDA).

The governance model also seeks to establish various technical workstreams, focused on the technological adaptations needed to accommodate the transition to T+1.

The watchdogs added that two more general workstreams will also be established to review the scope and the legal and regulatory aspects of these adaptations.

Lastly, a coordination committee will be established, chaired by ESMA and with representation from the EC, the ECB and the chair of the industry committee.

This committee will be tasked with ensuring coordination between the authorities and the industry, advising on any issue that may occur during the transition.

The first meeting of the coordination committee is scheduled for 6 February.

ESMA has suggested 11 October 2027 as the optimal date for the transition to T+1 in the EU, aligning with the UK’s proposed switch and today, 23 January, Switzerland also announced plans to move to T+1 in October 2017, with the date now being a consensus between the EU, Switzerland and the UK.

The post EU watchdogs launch new governance structure to support T+1 transition appeared first on The TRADE.

The initiative will “draw from talented staff across the agency,” and specifically work for the development of the asset class, helping the Commission to “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously”. 

The initiative has been introduced by Mark Uyeda who was appointed acting SEC chair earlier this week by the new US administration, while commissioner Hester Peirce will lead the task force. 

The key factor is set to be clarity around who should register and, importantly, how. As part of the crypto task force, the SEC is set to hold roundtables for market participants.

“This undertaking will take time, patience, and much hard work. It will succeed only if the task force has input from a wide range of investors, industry participants, academics, and other interested parties,” said Peirce. 

“We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation.”

Read more:  Gensler alludes to departure from SEC 

Mark Uyeda was appointed acting chair of the SEC on 21 January by the new US administration. Speaking about his temporary role, he highlighted the important role the position plays in “promoting innovation, jobs creation, and the American Dream”. 

He added: “I am honoured to serve in this capacity after serving as a Commissioner since 2022, and a member of the staff since 2006. I have great respect for the knowledge, expertise, and experience of the agency and its people.” 

Paul Atkins was named chair of the US SEC following confirmation of Gary Gensler’s departure back in December 2023.

Atkins was initially appointed by President George W. Bush as a commissioner of the SEC on 29 July 2002, where he served until August 2008.

Uyeda will hold this office until Atkins officially assumes the position later this year.

The post SEC unveils new crypto task force appeared first on The TRADE.

Robbert Booij

US market participants can now more efficiently manage their exposure in European equity markets through these additional instruments, said Eurex. 

Specifically, EURO STOXX 50 Index Dividend Options and EURO STOXX Banks Index Dividend Options can now be directly traded from the US. 

With dividends increasingly recognised as an asset class in their own right, the market is ripe for further scope in this space when it comes to listed dividend derivatives.

Robbert Booij, chief executive of Eurex Frankfurt, highlighted that this is a milestone as Eurex seeks to expand its global reach. 

“Removing access barriers and making our products available to global investors is a top priority for us. With dividend options on key indices such as the EURO STOXX 50 Index and the EURO STOXX Banks Index, US investors have another efficient tool to manage their exposure to the European market.” 

The move follows Eurex’s launch of mid-curve options on EURO STOXX 50 Index Dividend Futures last year, which are also tradable in the US. 

Speaking at a closed Deutsche Boerse roundtable last November, Erik Müller, chief executive of Eurex Clearing, highlighted exchange traded derivatives (ETD), interest rate swaps (IRS) and repo as the three key pillars for the business.

The post CFTC approves Eurex dividend options for US trading appeared first on The TRADE.

Interested parties are invited to register and submit requests to participate by 7 February 2025 – after which ESMA will assess these requests against the ‘exclusion and selection criteria’ before successful candidates are invited to submit their official applications. 

​Speaking in its most recent announcement the watchdog reiterated that “the CTP aims to enhance market transparency and efficiency by consolidating trade data from various trading venues into a single and continuous electronic stream”.

Adding: “This consolidated view of market activity should help market participants to access accurate and timely information and make better-informed decisions, leading to more efficient price discovery and trading.” 

As previously communicated, ESMA is set to appoint a CTP by early July 2025, with the successful applicant invited to operate the consolidated tape for a five-year period. 

In December 2023, Etrading Software confirmed plans to bid to become the consolidated tape provider (CTP) for both the UK and EU. This followed the announcement that the Bloomberg, MarketAxess and Tradeweb JV was off the table. 

Ediphy has also confirmed its intention to bid for the European fixed income tape, as of last September, as well as also gearing up to apply in the UK. 

In addition, firms FINBOURNE and Propellant have also been involved in industry discussion around potential applications to the bond CTP in Europe and the UK.

Speaking to The TRADE about the launch of the first stage of the CTP selection procedure, Neil Ryan, consultant at FINBOURNE, said: “ESMA’s phased approach to the CTP selection process is a welcome move toward ensuring a robust and effective outcome. The focus on a system that aligns with the technical intricacies of fixed income markets and adapts to their unique requirements is critical.

“The proactive elements of this process are more measured and better attuned to the market’s needs, paving the way for a high-quality consolidated tape at a reasonable price. Prioritising high quality, accurate data is essential – without this, the CT risks undermining its effectiveness and eroding the trust of market participants.”

More to follow…

The post ESMA launches first stage of bond CTP selection process appeared first on The TRADE.

Following a year of elections around the world, and the appointment of a new European Commission, “competitiveness” seems to be high on every policy maker’s agenda. So, 2025 will see more heated debate, and perhaps some real progress, towards the alignment and streamlining of regulation – in an attempt to remove barriers to growth and improve the efficiency of financial markets. But the existential argument will be about how to encourage that greater competitiveness – whether it can be driven by top-down by policy makers or would be better achieved through a competitive market dynamic which enables, innovation and user choice more broadly. 

Listening to our customers has led us to innovations such as periodic auctions, securities financing transactions clearing, and VWAP trajectory crossing – all market-led solutions that deliver improved trading performance, better risk management and greater capital and operational efficiencies. 

So, we hope that regulators and policy makers also listen to what the customers of financial markets need – real and open choice and competition in the provision of listing, trading, clearing, settlement and (with the introduction of a consolidated tape) market data. Europe cannot achieve competitiveness without embracing competition.    

Leo Labeis, CEO, REGnosys  

Next year will be a year of continued reporting challenges and subsequent growth of the RegTech industry – predicted to be worth $85 billion by 2032 – as financial firms look to technology to stay ahead of regulatory changes.  

This year saw the implementation of version 3.2 of the CFTC Rewrite, Emir refit (both the European and UK versions), JSFA, MAS and ASIC. This has come with challenges from an implementation perspective, with the EU refit being particularly difficult for market participants and trade repositories.   

However, these changes are broadly welcome as they will accelerate the pace of data harmonisation across jurisdictions. Next year will see a continuation of these reforms with Canada and Hong Kong scheduled in the next 12 months. Eyes are also on the US with the new administration’s potential to adopt a new regulatory agenda, and Europe with several consultations regarding Mifid and SFTR.  

Matt Smith, chief executive officer, SteelEye     

Changing administrations, especially to different parties, typically results in a change in regulatory approach. We have already seen suggestions that the new administration in the US will change its attitude to enforcement, with regulatory attorneys predicting that Trump’s SEC is likely to halt the ‘off-channel’ texting probe.     

But while enforcement action might change, the regulatory rules are unlikely to. The sustained SEC crackdown on off-channel communications since 2021 has certainly put the wheels in motion for many firms to improve their e-comms record keeping programmes and this is unlikely to change.  

So, while the intensity of the enforcement action may shift in the US in 2025, we don’t expect firms will reverse any of the initiatives they have put in motion. 

Scott Charity, senior market intelligence specialist and regulatory affairs at Berenberg   

Over the next year we will see many new regulations being implemented throughout Europe, including DORA. The EU and ESMA have published multiple consultation papers for the market which includes order and record keeping and transaction reporting. These are all part of the Mifid II and Mifir Review.  The EU also has the new DPE reporting regime which will come into force next year. This follows on from the changes UK has already implemented in 2024. The change to the reporting regimes in the UK and EU is part of a process to clean up data which should help with the creation of the consolidated tapes both in the UK and EU. 

From a trading landscape point of view, we should see the impact of the new dark books which have been adopted in Europe in 2024 and which will continue in 2025. This will show if the dark midpoint books are a good source of liquidity. As multiple exchanges adopt these changes for sourcing liquidity, impact, if any, to lit book may be observed.   

New venue and trading liquidity sources should show a very eventful 2025. 

The post The TRADE predictions series 2025: A regulatory outlook appeared first on The TRADE.