The Financial Conduct Authority\u2019s new consultation starts the delivery of two structural reforms for equities: it proposes allowing Multilateral Trading Facilities (MTFs) to deal as principal on their own order books, chiefly letting them cross blocks within a unique legal entity and asks for feedback on widening the reference-price waiver.<\/p>\n
The FCA says: \u201cIn this consultation we propose three main changes\u2026 removing the prohibition on an investment firm to execute clients\u2019 trades on the MTF they operate on a matched principal trading basis\u2026 [and] permitting trading venues operating under the reference price waiver to use a broader set of prices than just the primary market\u201d .<\/p>\n
Under the current Markets in Financial Instruments Directive (MiFID II) derivation, an MTF operator may not interpose itself between two clients on its own venue. The FCA concedes that the ban \u201cresulted in additional costs for the operators\u2019 group entity and their clients\u201d and that lifting it \u201cwill reduce complexity and\u2026 deliver greater simplicity in the execution of trades\u201d. The FCA therefore proposes to abolish the rule in order to let venues compete with Systematic Internalisers (Sis) when crossing blocks.<\/p>\n
The FCA says: \u201cThis will enable more firms to offer competitive execution services without the need for contrived legal structures, thereby fostering innovation and reducing costs for end users\u201d<\/p>\n
On transparency waivers, the FCA writes: \u201cWe therefore propose to allow trading venues to source their reference price from a wider set of trading venues, including those not currently qualifying, and to combine prices from multiple venues\u201d.
It also asks whether the waiver should move from a system-level to an order-level basis so that \u201cmid-price, dark orders\u201d can rest inside a lit book. The stated aim is to give venues \u201csimilar latitude\u201d to dealers that reference their own SI quotes, improving competition without undermining price formation.<\/p>\n
A FIX EMEA poll conducted in April saw market participants vote that the growth of bilateral trading is their top worry, prompting the FCA to \u201cpledge caution\u201d in any future equity reforms. The equity discussion paper focuses on market structure. It flags a structural shift. The FCA says: \u201cAn increasingly significant role for negotiated bilateral trading and a sustained decline in the share of trades executed on central limit order books (CLOBs)\u201d is raising doubts about \u201cwhether fragmentation could impact the effectiveness and attractiveness of United Kingdom equity markets.\u201d The Financial Conduct Authority is clearly aware of the current debate around measuring accessible liquidity. \u201c\u2018Addressable liquidity\u2019 is not defined in regulation but is commonly used in the market to mean liquidity that participants could interact with,\u201d the FCA says, before warning that studies which count only on-venue trades \u201ccould distort perceptions of the United Kingdom\u2019s market depth and attractiveness\u201d now that a growing share of flow is executed bilaterally. The FCA \u201cinvite[s] participants\u2019 feedback on whether the reporting or the dissemination of trade data is limiting the ability of firms or issuing companies to fully understand the liquidity in the market\u201d and, asks whether new compulsory trade-report flags or stricter use of existing ones are needed to isolate truly price-forming bilateral activity. Comments must be sent to the FCA by 10 September 2025; the FCA plans to \u201cfinalise the changes\u2026 in a policy statement in Q4 2025\u201d. An exhaustive equity-transparency consultation remains scheduled for 2026. According to the FCA\u2019s website notice, these reforms are intended to \u201csupport competition, reduce unnecessary complexity and improve market resilience\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"The Financial Conduct Authority\u2019s new consultation starts the delivery of two structural reforms for equities: it proposes allowing…\n","protected":false},"author":2,"featured_media":238306,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[51,2441,16,15],"class_list":{"0":"post-238305","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-markets","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114796847699147898","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/238305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=238305"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/238305\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/238306"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=238305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=238305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=238305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Read more: FCA pledges caution as industry voices concern over rise of bilateral trading.<\/a><\/p>\n
CLOBs, the FCA \u00a0notes, have long underpinned transparent price discovery, yet their share of addressable volume has fallen from 47 per cent in 2018 to 29 per cent in May 2025, prompting some of the FCA\u2019s market contacts to warn that the trend \u201cmay be affecting, or could in future affect, the visibility of addressable liquidity and the resilience of price formation.\u201d
On that basis the regulator asks whether the shrinking CLOB footprint is already distorting price signals and what steps might reinforce the order-book model\u2019s role in setting public benchmarks.<\/p>\n
Read more: Aquis study prompts calls for standardised FIX flags<\/a> .<\/p>\n