New regulatory powers Designated activities regime The regulation of financial markets
Financial markets represent the intersection between financial services firms and the wider economy. Engaging with these markets can include activities like listing a company’s shares on an exchange, entering into a derivative contract, or engaging in market activities such as short selling. These activities are carried out by a wide range of persons, many of whom are not typically considered to be financial services firms, and who are not authorised by the regulators.
	As an example, a large number and wide range of businesses across the economy enter into derivatives contracts. They are often used by businesses to manage the risk of price fluctuations. These businesses can be complex financial services firms or non-financial businesses operating in the real economy. For example, a car manufacturer may enter into metal derivative contracts as a way of protecting itself against a rise in the price of the metals that it needs to purchase at a later date.
	Many activities related to financial markets came to be subject to EU law as a response to the global financial crisis. These activities need to continue to be subject to rules when retained EU law has been revoked. Bringing these activities inside the current framework for regulated activities through the RAO would not be appropriate, as it would require all businesses and individuals engaging in those activities to become authorised persons, and to be supervised as if they are offering financial services directly in the way described above. This would be a disproportionate burden on those firms.
	Therefore, this Act enhances the financial services regulatory framework in FSMA 2000 by ensuring that activities relating to financial markets can continue to be regulated in a manner which is suited to these kinds of activities.