LONDON, January 17, Reuters - The Bank of England will have more powers to set direct requirements for clearing and settlements as part of a wider regulatory overhaul due to Brexit, the UK finance ministry proposed on Monday.
The BoE has very limited powers to set direct regulations for clearing and settlement, processes that ensure legal ownership is exchanged for cash and custody in stock and bond trade.
Legislation would need to be changed to keep up with the European Union's rules after Britain left the bloc.
In a paper, https: assets.publishing. The finance ministry said on Monday it proposes more extensive delegation of regulation to the BoE, though still working within the policies set by the government and high international standards as a result of the attached data file 1046976 Final version FRF for CCPs and CSDs consultation.pdf.
It would allow the BoE to take enforcement action, waive or modify rules, and open investigations with financial stability as the overriding goal.
There will be a secondary objective of supporting innovation in a sector where there is https://www.reuters. com markets currencies hsbc-wells-fargo-use-Blockchain-settle forex-trades -- 2021 -- 12 -- 13 is making inroads to cut costs.
The EU will extend temporary permission for banks in the bloc to use clearers in London from June onwards.
Brussels wants to move parts of the euro business from London to the bloc because of the fact that it doesn't have enough say over foreign clearers during times of market crises.
The ministry said that the BoE should consider the impact of its decisions on jurisdictions with significant exposures to clearers in Britain.
Britain is considering making it explicit that the BoE must ensure its regulation is based on financial stability risks and not on the basis of nationality or location of users, according to the ministry.
The ministry will be consulting on the regulatory perimeter for systemically important firms in the payments sector in the first half of 2022.