Workshop on the secondary innovation objective

The Bank of England hosted a workshop to gather views from industry, academics, and other regulators on the linkages between innovation, regulation and financial stability, to inform the Bank’s approach to implementing its new secondary innovation objective.

About the workshop

Date: 12 April 2024

Location: Bank of England

The objective of the workshop was to gather a cross-section of views to deepen the Bank’s understanding of the link between innovation, regulation, and financial stability, to inform the Bank’s approach to the secondary innovation objective.

The Bank of England received a secondary innovation objective under the Financial Services and Markets Act 2023, which applies in its regulation of central counterparties (CCPs) and central security depositories (CSDs)footnote [1]. The Bank’s primary objective of protecting and enhancing UK financial stability remains the same. The secondary objective requires the Bank to, where possible, facilitate innovation within CCP and CSD services when advancing the primary financial stability objective.

The new secondary objective accompanies a new general rulemaking power over CCPs and CSDs for the Bank as well as other accountability and transparency mechanisms, which include conducting cost benefit analyses when making new rules, and increased engagement with HM Treasury and Parliament.

Workshop participants contributed towards insightful discussions on the following topics:

  • Defining Innovation: Perspectives from across sectors.
  • Innovation and Regulation: How do regulation and innovation interact and how can good regulation help to facilitate innovation?
  • Innovation and Financial Stability: Maintaining Financial Stability as innovations in FMI services evolve.

Participants shared a number of valuable perspectives, including the goals of innovation in terms of the outcomes it tries to achieve; breadth of innovation, beyond technology to areas such as process change and organisational change; and openness to innovation, including dialogue between innovators and regulators, and fostering a culture of openness to innovation within regulators.

The Bank will publish further information on its approach to the secondary innovation objective in its 2024 report on the supervision of financial market infrastructures.

  1. The Bank of England’s secondary innovation objective is separate from Prudential Regulation Authority’s two secondary objectives on competition and competitiveness and growth.

This page was last updated 18 April 2024