3 hours ago
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The UK Treasury is cutting back its rules for financial benchmark providers in a move aimed at making the country look more attractive to US investors, according to the Financial Times.
The government is rolling out a lighter system that lets asset managers buy a wide range of benchmark products without waiting for providers to meet strict local requirements.
The plan removes most companies from the current framework, with officials saying about 90 percent of benchmark companies will no longer fall under the existing rules.
These companies run stock and bond indices that guide massive amounts of global capital, and the Treasury says the goal is to reduce friction as the UK tries to lift a slow economy.
The Treasury is also dropping a rulebook that would have restricted which foreign benchmarks UK asset managers could use. Those rules were meant to take effect in 2030, but the government is scrapping them now.
The change aligns the UK more closely with the US, where these businesses operate without the same oversight. The timing raises questions because the Financial Conduct Authority only sent a “Dear CEO” letter a year ago, warning benchmark providers about weak governance and bad data quality.
The letter called on companies to deal with the risks the FCA said it had already identified.
Treasury limits the number of companies under rules
The UK currently has around 45 authorized benchmark providers, including LSEG, S&P Global, JPMorgan Chase, and Bloomberg.
Under the new approach, only those offering widely used benchmarks will stay under the Financial Conduct Authority. The rest will fall outside the formal regime.
The Treasury says it wants feedback before locking in the changes, framing them as another step toward cutting down red tape in London while the government looks for ways to revive growth during President Donald Trump’s second term in the White House.
The announcement lands at the same time the EU is signing off on its own reforms. Lawmakers have approved a package meant to push more everyday people in the bloc to invest in stocks and bonds instead of keeping most of their money in low-return bank accounts.
One of the lead negotiators, Stéphanie Yon-Courtin, said the new rules would “move the savings and investment union from theory to reality,” and that the work focused on preventing abuse while keeping advice open to regular investors.
EU increases pressure on advisers to show value
The retail plan is part of the EU’s Capital Markets Union, which has been running for a decade. Its goal is to make capital move more easily across the bloc and to help companies access funding.
The effort responds to long-running concerns from officials who say households keep too much of their wealth in deposits. Last year, households put 41 percent of their financial assets in bank accounts and only 20.6 percent in funds and listed shares.
Under the new rules, advisers and investment platforms must give clear details on costs and charges tied to investment products and must show that the products offer value for money. Two regulators, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority, will create benchmarks for insurance-based products so investors can compare costs and performance.
Companies selling other investment products must also compare their pricing and returns with similar options.
The package also brings in a new inducement test. Advisers can still receive inducements for things like research, but they must show they act in the best interests of clients and make those inducements clear enough for customers to separate them from other fees.
Advisers must also judge whether clients understand the investments they buy, including their ability to handle partial or total losses.
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