New regulatory powers Financial market infrastructure: general rules and requirements Regulation of FMI by the Financial Conduct Authority Recognised Investment Exchanges
A Recognised Investment Exchange (RIE) is a multilateral system which brings together multiple third-party buying and selling interests in financial instruments in accordance with non-discretionary rules. They are managed and/or operated by a market operator.
	RIEs are one of three types of trading venue. The other types are multilateral trading facilities (MTFs) and organised trading facilities (OTFs)
MTFs: Like RIEs, MTFs are multilateral systems which bring together multiple third-party buying and selling interests in financial instruments via a system with non-discretionary rules. Whereas RIEs are managed and/or operated by a market operator, MTFs can be operated by an investment firm or a market operator.
OTFs: OTFs are also multilateral systems that facilitate the bringing together of multiple third-party buying and selling interests and can also be operated by an investment firm or market operator. Unlike RIEs and MTFs, the execution of orders on an OTF is carried out on a ‘discretionary basis’, where the market operator takes an active role in managing trades.
	RIEs currently sit outside of the core FSMA 2000 authorisation regime and the FCA has limited rule-making powers over them because, prior to EU exit, the regulations relating to them were largely set at EU level through the Markets in Financial Instruments Regulation (MiFIR). MiFIR is one of two pieces of EU legislation (the other being MiFID II) which together underpin what is sometimes referred to as the MiFID II framework. As outlined above, as part of the onshoring process, the MiFID II framework was amended to address deficiencies arising as a result of the UK’s withdrawal from the EU and the end of the Transition Period.
	The lack of wider rule-making powers over RIEs is a problem because as part of the Future Regulatory Framework (FRF) Review the government intends, as a general approach and over time, to revoke the direct regulatory requirements in EU-derived regulation that apply to firms to enable the appropriate regulator to set their own rules. This is to ensure that the regime is proportionate and flexible. Without these proposed new powers, it will not be possible for the FCA to adequately replace the regulatory requirements that relate to these entities.
	This Act therefore gives the FCA a general rule-making power over RIEs to enable the FCA to:
replace the provisions in retained EU law relating to the regulation of RIEs; and
ensure that the FCA has an effective way of upholding and enhancing standards in the future.
	This is important to future-proof the regime and mitigate risks as the market evolves, including as the market continues to incorporate the trading of new types of asset classes and embrace new forms of technology.