FCA consults on future of SI regime for bonds and derivatives

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/20 on the systematic internaliser (SI) regime for bonds and derivatives. The consultation builds on the November 2024 final policy statement which introduced new bond and derivative transparency rules for trading venues and discussed the future of the SI regime. Given the removal of the pre-trade transparency from SI's obligations in bonds and derivatives, the FCA is now consulting on the SI regime and continued alignment between the transparency and SI regimes, along with additional proposals aimed at enhancing the functioning of UK markets.

Key proposals include:

• Removing the SI regime for bonds and derivatives, as well as structured finance products and emission allowances.
• Removing the prohibition on matched principal trading for firms operating a multilateral trading facility.
• Amending reference price waiver rules to give trading venues more flexibility in sourcing equity market reference prices and to allow use of the reference price waiver in lit markets.
• Lifting the restriction that prevents an investment firm acting as an SI from also operating an organised trading facility.

In addition, the consultation also includes a discussion paper in chapter 4, seeking views on the structure and transparency of the UK equity markets, which will inform the FCA's proposals due to be consulted on in 2026. The deadline for responses to both the consultation and discussion paper is 10 September, with final rules expected in a Q4 2025 policy statement.

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