Traditional stock markets must cut red tape if they want to lure retail investors away from crypto, the chief executive of the London Stock Exchange has said.
“If we want to protect consumers, we should certainly make it easier for them to buy regulated assets rather than allowing them to enter the unregulated market, which is easier to access because there are fewer restrictions on doing so, ” said Julia Hoggett. Financial news.
Until as recently as March, when the Financial Conduct Authority stepped in to shut them down, retail investors could use “crypto-ATMs” to buy cryptocurrencies in seconds. Hoggett told United Nations that traditional finance still has a role to play in becoming more attractive if it wants to win over a new generation of investors.
“It shouldn’t be easier to buy a cryptocurrency from a corner store ATM than it is for one [retail investor] to buy a stake in Oxford Nanopore’s IPO,” she said.
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Regulators have become more focused on their oversight of cryptocurrencies as the so-called ‘crypto winter’ bites. The start of stricter regulation is beginning to filter through the legislative process in the UK, EU and US.
But the rules for equity investing have not kept pace with market shifts and are “based on very analog time”, she added. “Most people now use financial products via apps or email rather than through physical documents.”
Hoggett pointed to potential improvements to come in the UK, including the Financial Services and Markets Bill, published on July 20, and the Secondary Capital Raising Review completed by Mark Austin.
“The vast majority of all the regulatory changes that the government has proposed are very much focused on right to retail, which I think is critical,” she said.
As well as improving retail access to financial markets, Hoggett said the financial sector itself needs to change the language it uses when discussing investment with the average consumer.
“As an industry, we talk in basis points, coverage ratios and language that excludes people who are not in finance from really understanding what we’re talking about,” she said.
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“Simply by changing that language, from being very self-referential, to reflecting the ultimate purpose and who the end customers are … the users and providers of capital are distributed across this country and around the world.
“People talk about ‘The City’ as this foreign thing that means something to bankers, stock exchanges and lawyers in the Square Mile. It doesn’t necessarily matter to someone in Cumbria, Glasgow or Belfast. But it should.”
The benefits of investing in traditional stocks or debt should also be reinforced for investors, Hoggett said.
“It’s investing back into companies, jobs and growth potential in the economy. We should be encouraging people to do that.”
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To contact the author of this story with feedback or news, email Jeremy Chan