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00:00:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
00:00:07
Speaker 2: The UK Chancellor Rachel Reeves meeting with the Treasury Secretary Scott Besson at the IMF as countries lineup to strike trade deals with the United States. Corporates and regulators looking for clarity as President Trump shifts the global economic landscape. Joining us now to discuss Nicole Rathie, the CEO of the Financial Conduct Authority, a financial watchdog which wallishes over forty thousand businesses in the UK. Nicol Welcome to the program sir, and sorry to miss you. You're up in New York. We're down in Washington, d C. We cross passed I think in the last forty eight hours. I want to start with the nature of this shark and what it means to you personally and for the institution and ultimately for the UK. Nicole, this is a policy shark across many dimensions. Does it have the potential to morph into a financial shark as well?
00:00:50
Speaker 1: Morning, Jonathan. What we've seen over the last few weeks has been extraordinary volatility, record trading volumes in London. We oversee a huge global financial center with asset classes ranging from commodities, equities, fixed income and what you've seen is actually the financial markets staying resilient you heard that from aDNA just now, and coping with the changes in the external environment and seeking to find the price. And that is what we're focused on as regulators, making sure market integrity is maintained and the markets are functioning and preventing what you asked about, which is a policy shock turning into a financial shock.
00:01:31
Speaker 2: Nikko. One word we've heard repeatedly over the past few weeks, and I'm sure you've heard the same word as orderly. Things have been orderly. When I think of certain vulnerabilities in the UK, my mind often shifts to the UK housing market. What is the positioning of the housing market at the moment? And you think now is a good time to reconsider whether to lighten up some of the stress tests on say, mortgage applications in the not too distant future.
00:01:54
Speaker 1: You're right, market conditions have been orderly, and I think that's testament to all the work that's gone in over of years on operational resilience, on liquidity, on capital and on data and vigilance in the markets to make sure that we do keep things orderly in these periods of extraordinary volatility, and the same applies to the housing market. We've seen a very significant shift in the interest rate environment in the UK like in other countries around the world over the last few years, but the housing market has held up. Our repossessions are actually lower than pre COVID and we're seeing continued resilience in consumer balance sheets, and therefore we think it is appropriate for us have a discussion in the UK about how we support first time buyers access home ownership. A lot of people are paying high rents in cities around the UK and that isn't great for their long term financial well being, and so that's why we've moved in that direction as part of our overall push to support growth in the economy in the UK, which is obviously an urgent need.
00:02:55
Speaker 3: Nikkil there are two sides to this, and one, how do you could say that the resilience of the global financial system is the result of some of these regulations and stress tests. On the other hand, you could say that maybe some of these consumers don't have access to maybe as easy credit because of how regulated some of the financial institutions are. Are you pushing back against what we're hearing globally in particular in the US, saying let's remove some of the regulations that maybe are too stringent on the financial sector.
00:03:23
Speaker 1: We've had great conversations here in the US this week. I had the pleasure of meeting Chair Atkins shortly after he was sworn in, and I'm meeting a number of my other US counterparts, and I think on the whole agenda of growth, innovation, competitiveness, I think we're aligned. And this conversation is happening in the US, it's happening in the UK, it's happening in the European Union. We have significantly improved standards of capital and liquidity. In the UK, We've raised standards of consumer protection with our Consumer Duty and it's right having done that to make sure that the regulations are fit for purpose, for the needs of the future and what the economy needs right now. And I think we've we're moving very fast after putting around fifty proposals to our Prime Minister at the start of the year to implement those simplify our rules whilst maintaining consumer protection and marked integrity.
00:04:10
Speaker 3: Well, I guess another way to frame this is in the years after two thousand and eight, there was a steady march toward tightening financial restrictions on banks, and we've seen as a result of that financial institutions lose businesses to private ones and a whole host of other transformations. Are we going to see some modicum of reversal of that? Are we going to see going forward walking back of some of the regulations around major financial institutions around the world, not just in the United States, but also in the UK and EU.
00:04:39
Speaker 1: I think you will see a recalibration, and we're well underway with some of our significant reforms in the UK on capital markets. We've put through some of the most far reaching reforms to our listing rules in the last year or so. We're reforming the rules around prospectuses. We're transforming the way advice is provided in the UK so that our pension system is better able to provide capital, infrastructure and scale up companies. We're also though a global financial center, and we want to make sure that our markets serve all needs. So I don't see this as a opposition between banks and non banks. We want businesses of all sizes to be accessing the capital they need, equity or debt from public markets, from private markets, from banks, and the important thing is to make sure that all are well regulated and that we have the data we need to monitor and make sure the risks are well managed.
00:05:29
Speaker 4: Across multiple policies. Really, this White House Washington is setting the gender for the rest of the world. Are you concerned at all for race to the bottom when it comes to deregulation.
00:05:38
Speaker 1: That's not the message I was getting from my US colleagues this week at all. There isn't an energy here around regulatory reform, for example in the area of digital assets and stable coins, but also a commitment to making sure we have high standards of integrity. I think Chair Atkins said and his statement when he was appointed that he's committed to secure markets in the US. We have a very deep relation relationship with our US capital market counterparts. We share considerable amounts of data, and we work really closely together on market developments on enforcement. So, for example, in recent weeks, we've seen significant volatility in sovereign debt markets and in bond markets. There's been a significant rise in HEDGEMND participation in those markets. We're talking about those issues and making sure we have a good mutual understanding.
00:06:27
Speaker 4: You are the first head of the Authority to actually get a second five year term. What do you hope to achieve in the next five years.
00:06:36
Speaker 1: Our Prime Minister has talked about rewiring the state in the United Kingdom so that we are digitally enabled and fit for purpose for the rapidly changing technological environment we are living in. And I think that applies to regulators too, And we have, obsee one of the world's largest financial centers. We want to be open to business to participants from all over the world. That's based on high standards, and we want to move fast on embracing new technology too and forging you know, deep deeper relationships with all of our key trading partners. So I think you'll see us moving very fast now on regulatory reform and seeking to make sure that we are right at the cutting edge of these new technological shifts.
00:07:20
Speaker 2: Nickil, thanks for sharing some time with us this morning. We appreciate it. A busy morning for you, I'm sure in New York City. Nicol Rathi there, the CEO of the Financial Conduct Authority