Regulatory Strategy

  • Leading the debate

    London Stock Exchange Group is an active participant in international and domestic regulatory debates.

As one of Europe’s leading diversified exchange groups, London Stock Exchange Group is an active participant in international and domestic regulatory debates.

This page contains links to recent submissions and responses on behalf of the Group, or certain entitites within the Group.

May 2017

LSEG Response to FCA DP 17/1 Illiquid Assets and Open Ended Investment Funds

  • We agree that funds invested in illiquid assets which offer daily liquidity face inefficiencies and complex issues in stressed market conditions.
  • As a solution, LSEG propose admitting securities onto regulated markets, combined with a reduction in frequency of redemption events. This would provide an orderly secondary market for price formation and investor liquidity, reduce the need to ‘gate’ funds, and enhance investor protection and reduce systemic risk.
  • Access to funds at calculated Net Asset Value would still be possible at periodic intervals, for example quarterly rather than daily intervals.
  • LSEG’s proposal is based on the existing hybrid model of listed closed-ended funds.

March 2017

LSEG Response to the European Commission Capital Markets Union Mid Term Review

LSEG is delighted to respond to the Commission’s CMU Mid Term Review. Our key recommendations are:

  • National SME Growth Market Funds of Funds to catalyse the quoted SME investment ecosystem 
  • EU signposting for SME advisory ecosystems (e.g. ELITE)
  • Promote Private Placements. ‘ELITE Club Deal’ provides a standardised e-platform 
  • Prospectus Regulation. This is a major success measure for CMU and must be got right (e.g. to support SME Growth Markets)
  • Corporate Bonds Liquidity. Issuer ecosystems; liquidity bridges; lower denominations; targeted standardisation and regulated electronic trading are key 
  • Fiscal Bias. We support addressing this but not by restricting debt relief, which increases the cost of capital
  • Call for evidence on impact of financial regulation. Attention is due to SME investment research; Short Selling review; EMIR small counterparties; CSD-R market making impact 
  • Sustainable Investment. Access to ESG data; asset owners culture change; regulatory barriers are key
  • Retail. We welcome the forthcoming distribution review. PRIIPs aggregated disclosures should be permitted 
  • EU Personal Pensions. The US 401k is a model that promotes equity investment. SME asset class restrictions should be avoided (also in Solvency II).
  • European Post Trade Forum. Market infrastructures are the core hub for harmonisation 
  • Supervisory Convergence. ESMA should have an objective to support real economy growth

LSEG response to ESMA’s Guidelines on transfer of data between TRs

In line with the Open Access principle, we believe that customer’s choice and ability to switch providers has an overall positive impact, as it leads to lower trading prices, reduced spreads, faster and more resilient technology, and a fundamental rebalancing of the relationship between the providers of infrastructure and its users. Therefore, we welcome and support ESMA’s initiative to publish guidelines on transfer of data between TRs. However, we believe that the processes suggested in the Guidelines, which place the onus of data transfer solely on the TRs, are not the most efficient and effective approach. In our response we detail the reasons and potential impact of the switch being executed without TR participant’s involvement:

  • Loss of data to the regulators
  • Decrease in reconciliations and pairing rates
  • Duplication of data sharing process
  • Disproportional burden on the Old TRs.

February 2017

LSEG response to the FSB Task Force on Climate related Financial Disclosures (TCFD) Recommendations Report

London Stock Exchange Group (“LSEG”) welcomes the opportunity to respond to the Recommendations Report of the Financial Stability Board (“FSB”) Task Force on Climate-Related Financial Disclosures (“TCFD”).

  • LSEG role.
    - Global financial markets and international institutions are responding to climate change by embracing a transition to the low carbon economy. We play a key role in this transition, as we promote greater transparency around risk and opportunities related to various financial and non-financial disclosures. On our markets, we list green companies and bonds. FTSE Russell, part of LSEG, is a global leader in environmental, social and governance (“ESG “) indexing and analytics. In February 2017, LSEG has launched ESG guidelines, as a result of our commitment as an active member of the UN Sustainable Stock Exchange initiative, to establish guidance for all issuers on our UK and Italian Markets on best practice voluntary ESG reporting to investors.
  • Feedback from the Phase I Report.
    - We are pleased by the fact that the TCFD took into account several recommendations put forward by LSEG and the various industry participants in the responses to the Phase I report in April 2016, in particular on green revenue, sector approach, and standardization in frameworks. The TCFD recommendations were much anticipated by the industry and regulators alike. And we are pleased they strike a balance between encouraging supply of consistent, easily comparable and reliable data and the need to avoid overly prescriptive requirements, particularly where global consensus has not yet been reached
  • Way forward.
    - Climate change can affect financial stability in the long run and therefore we offer a long-term commitment to the issues underpinning it. We are a founding member of the European Commission High Level Expert Group on Sustainable Finance (“HLEG”), tasked with drafting recommendations for a comprehensive EU strategy on sustainable finance to determine how to integrate sustainability considerations into the EU's rules for the financial sector. This marks an important step in the follow-up to the EU's 2030 Agenda for sustainable development as well as the Paris Agreement on climate change.