March 17, 2020 / 10:57 AM / 12 days ago

Britain's FCA to keep stock markets open in the face of virus volatility

LONDON (Reuters) - Britain’s markets watchdog said on Tuesday it wants to keep stock markets open despite the extreme sell-offs seen in recent sessions, which have prompted some European countries to introduce trading curbs.

The watchdog also signalled more flexibility for traders who are executing stock transactions from back-up sites or from home.

“Our aim is to continue to maintain open and orderly markets notwithstanding current volatility,” the Financial Conduct Authority (FCA) said in a statement.

Separately, the London Stock Exchange (LSE.L) said it has no plans to suspend trading as companies “continue to need access to capital”, and will ensure that pricing of shares is conducted in a fair and transparent manner.

The FCA’s U.S. counterpart, the Securities and Exchange Commission, said on Monday it would keep Wall Street open for trading despite a plunge in U.S. shares and speculation the government would shut down markets.

The FCA said it was ready to “take any steps necessary” to ensure that customers are protected and that markets continue to function well.

Banks have already begun trading shares and other securities from split sites to minimise the potential for the coronavirus to spread among their staff.

This, and the prospect of traders having to execute transactions from home - which has yet to happen at major banks - has raised questions about meeting compliance requirements such as having equipment to record and track trades for regulators to spot any market abuses.

“Firms should continue to record calls, but we accept that some scenarios may emerge where this is not possible,” the FCA said. It had previously said that firms should continue to meet all compliance requirements like recording calls.

“This signifies a slight and sensible shift in approach,” said Jake Green, a regulation partner at law firm Ashurst.

The FCA said firms should make it aware if they are unable to meet these requirements.

“We expect firms to consider what steps they could take to mitigate outstanding risks if they are unable to comply with their obligations to record voice communications,” it said.

Traders could introduce “enhanced monitoring, or retrospective review” once normal trading resumes, the FCA said.

ACCESS TO CASH

Some firms have taken steps to enable customers’ access to cash, such as waiving fees for savings accounts and allowing them to end their term deposits early, the FCA said.

“UK firms have taken steps to help ensure consumers have access to cash, including the raising of cash machine withdrawal limits,” the FCA said.

“We are confident electronic payment providers have capacity to cope with the potential changes in transaction numbers.”

The FCA will also hold talks with banks in coming days regarding how to further help mortgage customers.

“In the current climate, we want firms to show greater flexibility to customers in persistent credit card debt,” it added.

The watchdog said firms that it regulates should report to the FCA immediately if they believe they will be in difficulty.

To allow firms to focus on supporting customers, the FCA said it was extending the closing date for responses to public consultations until October and rescheduling most other work.

“The FCA’s steps to help minimise demand on the industry’s existing capacity in the short term means that our focus can be pointed toward customer-care strategies,” UK Finance, a banking industry body, said in response to the FCA update.

Reporting by Huw Jones, Editing by Lawrence White, Alexander Smith and Jan Harvey

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