Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The UK Chancellor Rachel Reeves meeting with the Treasury Secretary
Speaker 2: Scott Besson at the IMF as countries lineup to strike
Speaker 2: trade deals with the United States. Corporates and regulators looking
Speaker 2: for clarity as President Trump shifts the global economic landscape.
Speaker 2: Joining us now to discuss Nicole Rathie, the CEO of
Speaker 2: the Financial Conduct Authority, a financial watchdog which wallishes over
Speaker 2: forty thousand businesses in the UK. Nicol Welcome to the
Speaker 2: program sir, and sorry to miss you. You're up in
Speaker 2: New York. We're down in Washington, d C. We cross
Speaker 2: passed I think in the last forty eight hours. I
Speaker 2: want to start with the nature of this shark and
Speaker 2: what it means to you personally and for the institution
Speaker 2: and ultimately for the UK. Nicole, this is a policy
Speaker 2: shark across many dimensions. Does it have the potential to
Speaker 2: morph into a financial shark as well?
Speaker 1: Morning, Jonathan. What we've seen over the last few weeks
Speaker 1: has been extraordinary volatility, record trading volumes in London. We
Speaker 1: oversee a huge global financial center with asset classes ranging
Speaker 1: from commodities, equities, fixed income and what you've seen is
Speaker 1: actually the financial markets staying resilient you heard that from
Speaker 1: aDNA just now, and coping with the changes in the
Speaker 1: external environment and seeking to find the price. And that
Speaker 1: is what we're focused on as regulators, making sure market
Speaker 1: integrity is maintained and the markets are functioning and preventing
Speaker 1: what you asked about, which is a policy shock turning
Speaker 1: into a financial shock.
Speaker 2: Nikko. One word we've heard repeatedly over the past few weeks,
Speaker 2: and I'm sure you've heard the same word as orderly.
Speaker 2: Things have been orderly. When I think of certain vulnerabilities
Speaker 2: in the UK, my mind often shifts to the UK
Speaker 2: housing market. What is the positioning of the housing market
Speaker 2: at the moment? And you think now is a good
Speaker 2: time to reconsider whether to lighten up some of the
Speaker 2: stress tests on say, mortgage applications in the not too
Speaker 2: distant future.
Speaker 1: You're right, market conditions have been orderly, and I think
Speaker 1: that's testament to all the work that's gone in over
Speaker 1: of years on operational resilience, on liquidity, on capital and
Speaker 1: on data and vigilance in the markets to make sure
Speaker 1: that we do keep things orderly in these periods of
Speaker 1: extraordinary volatility, and the same applies to the housing market.
Speaker 1: We've seen a very significant shift in the interest rate
Speaker 1: environment in the UK like in other countries around the
Speaker 1: world over the last few years, but the housing market
Speaker 1: has held up. Our repossessions are actually lower than pre
Speaker 1: COVID and we're seeing continued resilience in consumer balance sheets,
Speaker 1: and therefore we think it is appropriate for us have
Speaker 1: a discussion in the UK about how we support first
Speaker 1: time buyers access home ownership. A lot of people are
Speaker 1: paying high rents in cities around the UK and that
Speaker 1: isn't great for their long term financial well being, and
Speaker 1: so that's why we've moved in that direction as part
Speaker 1: of our overall push to support growth in the economy
Speaker 1: in the UK, which is obviously an urgent need.
Speaker 3: Nikkil there are two sides to this, and one, how
Speaker 3: do you could say that the resilience of the global
Speaker 3: financial system is the result of some of these regulations
Speaker 3: and stress tests. On the other hand, you could say
Speaker 3: that maybe some of these consumers don't have access to
Speaker 3: maybe as easy credit because of how regulated some of
Speaker 3: the financial institutions are. Are you pushing back against what
Speaker 3: we're hearing globally in particular in the US, saying let's
Speaker 3: remove some of the regulations that maybe are too stringent
Speaker 3: on the financial sector.
Speaker 1: We've had great conversations here in the US this week.
Speaker 1: I had the pleasure of meeting Chair Atkins shortly after
Speaker 1: he was sworn in, and I'm meeting a number of
Speaker 1: my other US counterparts, and I think on the whole
Speaker 1: agenda of growth, innovation, competitiveness, I think we're aligned. And
Speaker 1: this conversation is happening in the US, it's happening in
Speaker 1: the UK, it's happening in the European Union. We have
Speaker 1: significantly improved standards of capital and liquidity. In the UK,
Speaker 1: We've raised standards of consumer protection with our Consumer Duty
Speaker 1: and it's right having done that to make sure that
Speaker 1: the regulations are fit for purpose, for the needs of
Speaker 1: the future and what the economy needs right now. And
Speaker 1: I think we've we're moving very fast after putting around
Speaker 1: fifty proposals to our Prime Minister at the start of
Speaker 1: the year to implement those simplify our rules whilst maintaining
Speaker 1: consumer protection and marked integrity.
Speaker 3: Well, I guess another way to frame this is in
Speaker 3: the years after two thousand and eight, there was a
Speaker 3: steady march toward tightening financial restrictions on banks, and we've
Speaker 3: seen as a result of that financial institutions lose businesses
Speaker 3: to private ones and a whole host of other transformations.
Speaker 3: Are we going to see some modicum of reversal of that?
Speaker 3: Are we going to see going forward walking back of
Speaker 3: some of the regulations around major financial institutions around the world,
Speaker 3: not just in the United States, but also in the
Speaker 3: UK and EU.
Speaker 1: I think you will see a recalibration, and we're well
Speaker 1: underway with some of our significant reforms in the UK
Speaker 1: on capital markets. We've put through some of the most
Speaker 1: far reaching reforms to our listing rules in the last
Speaker 1: year or so. We're reforming the rules around prospectuses. We're
Speaker 1: transforming the way advice is provided in the UK so
Speaker 1: that our pension system is better able to provide capital,
Speaker 1: infrastructure and scale up companies. We're also though a global
Speaker 1: financial center, and we want to make sure that our
Speaker 1: markets serve all needs. So I don't see this as
Speaker 1: a opposition between banks and non banks. We want businesses
Speaker 1: of all sizes to be accessing the capital they need,
Speaker 1: equity or debt from public markets, from private markets, from banks,
Speaker 1: and the important thing is to make sure that all
Speaker 1: are well regulated and that we have the data we
Speaker 1: need to monitor and make sure the risks are well managed.
Speaker 4: Across multiple policies. Really, this White House Washington is setting
Speaker 4: the gender for the rest of the world. Are you
Speaker 4: concerned at all for race to the bottom when it
Speaker 4: comes to deregulation.
Speaker 1: That's not the message I was getting from my US
Speaker 1: colleagues this week at all. There isn't an energy here
Speaker 1: around regulatory reform, for example in the area of digital
Speaker 1: assets and stable coins, but also a commitment to making
Speaker 1: sure we have high standards of integrity. I think Chair
Speaker 1: Atkins said and his statement when he was appointed that
Speaker 1: he's committed to secure markets in the US. We have
Speaker 1: a very deep relation relationship with our US capital market counterparts.
Speaker 1: We share considerable amounts of data, and we work really
Speaker 1: closely together on market developments on enforcement. So, for example,
Speaker 1: in recent weeks, we've seen significant volatility in sovereign debt
Speaker 1: markets and in bond markets. There's been a significant rise
Speaker 1: in HEDGEMND participation in those markets. We're talking about those
Speaker 1: issues and making sure we have a good mutual understanding.
Speaker 4: You are the first head of the Authority to actually
Speaker 4: get a second five year term. What do you hope
Speaker 4: to achieve in the next five years.
Speaker 1: Our Prime Minister has talked about rewiring the state in
Speaker 1: the United Kingdom so that we are digitally enabled and
Speaker 1: fit for purpose for the rapidly changing technological environment we
Speaker 1: are living in. And I think that applies to regulators too,
Speaker 1: And we have, obsee one of the world's largest financial centers.
Speaker 1: We want to be open to business to participants from
Speaker 1: all over the world. That's based on high standards, and
Speaker 1: we want to move fast on embracing new technology too
Speaker 1: and forging you know, deep deeper relationships with all of
Speaker 1: our key trading partners. So I think you'll see us
Speaker 1: moving very fast now on regulatory reform and seeking to
Speaker 1: make sure that we are right at the cutting edge
Speaker 1: of these new technological shifts.
Speaker 2: Nickil, thanks for sharing some time with us this morning.
Speaker 2: We appreciate it. A busy morning for you, I'm sure
Speaker 2: in New York City. Nicol Rathi there, the CEO of
Speaker 2: the Financial Conduct Authority