The WFE Warns Against Regulatory Erosion That Could Undermine UK Public Markets And Investor Protections

The World Federation of Exchanges (WFE), the global association of exchanges and clearing houses, has submitted its response to HM Treasury’s consultation on asset management regulation, calling for a balanced approach that safeguards investor protections and supports the long-term health of public markets.

The UK has a well-established financial regulatory framework and a reputation as a global centre for finance, however, the WFE warns that the Treasury must be cautious not to bring in reforms that may unintentionally weaken investor protections or discourage companies from listing publicly - potentially damaging the very foundations of the financial ecosystem.

Public markets are the bedrock of the capital-raising system, providing price discovery, resilience in times of crisis, and accessible, long-term investment opportunities. Even private markets, in practice, rely on public ones in many ways (e.g. to provide exit vehicles for investments via IPOs and for transparent price discovery that helps inform valuations and trades). Meanwhile, private markets are an important pipeline to public markets and play a vital role in growing and scaling companies. 

Regulatory changes that shift the balance too far in favour of less regulated private markets could deepen existing challenges facing capital markets, including the declining number of new listings. For capital markets to prosper, it is important that regulation creates a level playing field for both private and public markets by ensuring adequate disclosure of material information, due diligence and investor protection across the system. 

Nandini Sukumar, CEO of the WFE, said, “The points we make in our response are valid the world over: policymakers must ensure that simplifying regulation does not come at the expense of transparency, accountability, and the robust protections investors have come to expect. Moreover, the growth of private markets is reshaping the investment landscape, and it’s crucial that regulators respond by ensuring that regulatory changes support transparency, resilience, and equitable access to capital across both private and public markets. It is also crucial for regulators to ensure that regulatory changes do not undermine public markets, which are key national strategic assets that benefit the entire capital ecosystem, including private markets.”

Read the full response here.