Statements & Remarks

Joint Statement on the U.S.-UK Financial Regulatory Working Group

WASHINGTON - The tenth official meeting of the U.S.-UK Financial Regulatory Working Group (Working Group) took place in Washington, D.C., on September 3, 2024.

Officials and senior staff from HM Treasury and the U.S. Department of the Treasury were joined by representatives from independent regulatory agencies, including the Bank of England, Financial Conduct Authority, Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Securities and Exchange Commission. Participation varied across themes, with participants expressing views on issues in their organizations’ respective areas of responsibility.

The Working Group meeting emphasized close ongoing UK and U.S. cooperation in a number of areas and focused on several key themes, including: 1) the economic and financial stability outlook, 2) banking issues, 3) digital finance and operational resilience, 4) sustainable finance and climate-related financial risk, 5) capital markets, and 6) developments in the non-bank sector.

The meeting opened with a broad discussion of the UK and U.S. economic and financial stability outlooks, with participants taking stock of current economic trends and market conditions and considering broader global factors. UK Treasury outlined the UK government’s core mission to deliver sustainable economic growth and the work to provide stability and certainty to the financial services sector in order to support growth in the wider economy.

On banking issues, participants offered an overview of developments in their domestic banking systems and banking regulation, including resolution-related developments and proposed Basel III-based revisions to capital requirements.  The UK outlined the findings from the Bank of England’s second assessment of the resolvability of the eight major UK banks, and the legislative progress in the Bank Resolution Bill.  Participants noted the importance of ongoing dialogue among international partners when implementing these initiatives and reforms.

The Working Group exchanged views about sustainable finance and climate-related risk in line with their respective mandates.  Representatives provided updates on climate-related disclosures for investors, including the UK’s approach in light of the International Organization of Securities Commissions’ recent endorsement of the International Sustainability Standards Board’s disclosure standards. Relevant participants discussed transition plan practices and noted the recent announcement of the IFRS Foundation to assume responsibility for the disclosure-specific materials published by the UK Transition Plan Taskforce, with a view to developing educational materials and considering updated application guidance.  UK authorities discussed the industry code of conduct for environmental, social, and governance (ESG) ratings and data providers and the Transition Finance Market review.  Participants also discussed rules on sustainability disclosure requirements for financial products, including fund names and anti-greenwashing rules, noting international initiatives on these topics.  UK authorities outlined their ongoing work to embed the supervision of climate-related financial risks and update existing supervisory expectations on climate risk management to more closely align with international regulatory guidelines. The parties exchanged views on the progress of work in multilateral fora, including in the G20 Sustainable Finance Working Group and the Financial Stability Board (FSB).

Participants discussed issues related to digital finance and operational resilience. Representatives exchanged views on their respective approaches to artificial intelligence (AI) and both current and future AI use cases within financial services.  U.S. and UK authorities discussed ways to work together, including as appropriate through international bodies, to leverage the potential benefits and address the risks of AI in financial services. Participants discussed recent developments in the financial sector’s use of tokenization, highlighting the role tokenization and other related developments may play in the international capital markets and payments landscape. Participants also reiterated the importance of effective regulation to address risks and continued bilateral and international engagement within the sector and among authorities.  The Working Group also discussed work underway to enhance cross-border payments, including under the G20 Cross-Border Payments Roadmap, which notes that greater regulatory alignment is key to the successful implementation of the Roadmap, and at the G7. Participants shared recent developments in their respective work on payments modernisation.

On operational resilience, participants noted ongoing international cooperation and shared regulatory updates. Participants continued discussions on regulation of critical third parties to the financial sector and about increasing bilateral cooperation on this topic.  The Working Group also discussed ongoing work to promote responsible innovation and comprehensive supervision and regulation in the areas of digital finance and operational resilience, including through the bilateral Financial Innovation Partnership.

Participants conferred on capital markets regulation. Following the shift to the shorter T+1 settlement cycle in May, U.S. participants shared observations on the transition. UK authorities provided an update on the progress the UK is making towards T+1 through its Technical Group of industry experts.  UK Treasury set out the UK government’s ambition to reinvigorate capital markets to drive investment and innovation in the economy. UK regulators updated participants on recently implemented changes to the UK Listing Rules.

The Working Group continued with a discussion of developments in non-bank financial intermediation (NBFI) and the importance of fostering resilience in the NBFI sector.  Participants discussed their respective domestic agendas, including on money market funds and open-ended funds.  Noting the cross-border nature of NBFI, participants discussed their continued international engagement on the topic, and specifically on the FSB’s work, to address vulnerabilities arising from leverage in the NBFI sector and work to improve market participants’ preparedness to meet margin calls.  Participants acknowledged the importance of continuing the implementation of NBFI reforms at the domestic level.

At the conclusion of the event, the Working Group agreed to reconvene in May 2025, while noting the importance of continued open dialogue on shared priorities.

The U.S.-UK Financial Regulatory Working Group is an ongoing biannual dialogue established in 2018 to deepen bilateral regulatory cooperation and to enhance: financial stability; investor protection; fair, orderly, and efficient markets; and capital formation across both jurisdictions.

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