London Stock Exchange boss accuses FCA of ‘playing fast and loose’ as she warns government may have to ‘step in’

The boss of the London Stock Exchange has taken aim at the financial watchdog over its plans to introduce greater market pricing transparency in signs of a major fallout between the two City institutions. Julia Hoggett, chief executive of the exchange, has accused the Financial Conduct Authority (FCA) of “playing fast and loose” with the market, warning she may ask the government to intervene if the regulator does not change course. The comments concern the FCA’s plans to introduce a pre-market consolidated tape for the UK public markets – a centralised mechanism aimed at improving transparency by aggregating buy and sell orders across different venues so that prices and volumes can be referenced more easily. According to Hoggett, the FCA’s current approach would make it an outlier in Europe and risks damaging the London market if appropriate safeguards are not put in place ahead to its introduction. “Public policy and regulation must recognise that there is a risk to market integrity, and ultimately to the national interest, if innovations like a pre-trade tape are not introduced within the right framework,” Hoggett wrote in a blog post on the LSE website. “It is also the case that introducing a damaging framework and assuming that any breakage to the system can be corrected afterwards may be playing fast and loose with market integrity. “If the FCA is not prepared to proceed with caution and protect market integrity, it may be essential to ask the Government to step in instead.” FCA must meet ‘critical tests’ ahead of transparency push, LSE boss says As the structure of the market has become more complex, more and more shares have changed hands away from fully open exchanges where information on bids and offers is displayed in real time. Known as “fully lit” venues, they contrast with deals done on what are known as “dark pools” of capital, where activity is disclosed later. In her blog post Hoggett outlined four “critical tests” for the consolidated tape to be operable and secure the LSE’s approval: that it captures sufficient market activity; that the system is resilient; that differences in the speed of the tape in recording price changes and the speed of other venues’ feeds cannot be arbitraged; and that all venues which contribute data to the tape are appropriately compensated. This story is developing, more to follow