The UK Financial Conduct Authority (FCA) has issued its final policy statement, PS24/14, introducing new transparency measures aimed at bond and derivatives markets. Set to take effect on 1 December 2025, the new policy is designed to enhance information available to investors while reducing costs for firms. The update also includes a discussion on the future role of systematic internalisers (SIs) within these markets reports Regulation Tomorrow.
The FCA’s policy statement follows a December 2023 consultation (CP23/32) under the Wholesale Markets Review (WMR), which concluded that the existing transparency framework in bond and derivatives markets lacked significant impact on price formation and imposed high operational costs. Responding to these concerns, the FCA proposed a simpler, timelier post-trade transparency regime, as now outlined in PS24/14.
The updated rules focus transparency requirements on specific instruments, aiming to clarify and streamline information for stakeholders. Transparency requirements now apply only to bonds admitted to trading on a venue and to derivatives subject to a clearing obligation. The new rules eliminate public trade reporting requirements for over-the-counter (OTC) trading of non-specified instruments conducted by investment firms.
Trading venues will need to meet updated standards for transparency, while recognised investment exchanges will follow high standards similar to those used for exchange-traded derivatives like futures. Liquidity determinations will no longer rely on prior calculations; instead, a set of proxies will be used to categorise an instrument as liquid, marking the discontinuation of the Financial Instruments Transparency System.
SI regime
The FCA has revised the definition of systematic internalisers from a quantitative to a qualitative approach, though it does not expect this shift to affect which firms are designated as SIs. As part of this transition, the FCA has opened discussions on the future of the SI regime for bonds and derivatives, with feedback invited until 10 January 2025. It aims to introduce more substantive changes to SI obligations alongside the new definition, with both changes expected to take effect on 1 December 2025.
The FCA has also outlined several transitional measures. From 31 March 2025, trading venues will no longer need to apply pre-trade transparency for voice and request-for-quote trading, and SIs in bonds and derivatives will not be required to provide public quotes. To ensure a smooth implementation, the FCA will work closely with trading venues, investment firms, and approved publication arrangements (APAs), monitoring the transition process.
Tender
The FCA is also preparing to launch a tender in December 2024 to appoint a UK bond consolidated tape provider, with the bond consolidated tape anticipated to go live after the transparency changes are in place. A consultation on the future of the SI regime is planned for Q2 2025, and the FCA expects to update its Handbook by 1 December 2025 to reflect the final transparency rules.
