IR Society responds to FCA Liquidity discussion paper
The Investor Relations Society has responded to the FCA, supporting a broader definition of ‘addressable liquidity’ that could potentially make UK stocks more investable (particularly for small- and mid-caps), and supporting the FCA’s proposed establishment of a post-trade consolidated tape for equities, provided it is complete, accurate and timely.
The Investor Relations Society
Office 605 Birchin Court, 20 Birchin Lane
London EC3V 9DU
Stephen McGoldrick
Financial Conduct Authority
12 Endeavour Square
London E20 1JN
By email: cp25-20@fca.org.uk
10th September 2025
Dear Stephen,
Re: Discussion Paper - Liquidity in equity markets
Thank you for giving us the opportunity to respond to your CP25/20 Consultation Paper on the SI regime for bonds and derivatives, that includes a Discussion Paper on liquidity in equity markets. This response is made on behalf of The Investor Relations Society (‘the IR Society’).
The IR Society represents Members working for publicly listed companies and investor relations focused service providers, to assist them in the development of effective two-way communication with the markets. It has approaching 800 Members, drawn mainly from the UK, including the majority of the UK FTSE 100, many of the FTSE 250 constituents and some from AIM-listed companies, as well as those listed overseas.
The IR Society’s mission is to promote best practice in investor relations; to support the professional development of its Members; to represent their views to regulatory bodies, the investment community and Government; and to act as a forum for issuers and the investment community.
Our response has therefore been primarily constructed through the lens of a corporate issuer. We set out below our general, high-level comments on those aspects of most relevance to our Members.
Broader definition of ‘liquidity’
Firstly, we would support a broader definition of ‘liquidity’ where the potential benefit would be that it should make UK stocks more investable (particularly for small- and mid-caps). This should also be helpful from a UK market perspective if it brings us more into line with international peers.
As noted in Chapter 4 of the consultation paper, as greater liquidity typically helps open up the opportunity for a larger holding, a lack of visibility of what constitutes true ‘addressable liquidity’ may currently be limiting potential exposure to UK stocks.
Incomplete or inconsistent data, ambiguous definitions of addressable liquidity and limited access to volume statistics have all contributed to an understatement of genuine liquidity, skewing capital allocation decisions.
In particular, ‘addressable liquidity’ should include trading across a range of trading venues, including swaps. Swap transactions—especially those entailing economic transfers of ownership—are frequently omitted in trade reporting, which we believe distorts the overall picture of market liquidity. We would therefore support a requirement for disclosures based on the transfer of economic ownership (see Q12).
Improving data on liquidity
We also support the FCA’s proposed establishment of a post-trade consolidated tape for equities, provided it is complete, accurate and timely. This should provide a comprehensive picture of transactions in equities (shares, ETFs, depositary receipts and certificates), bringing together trades executed on trading venues as well as OTC (ie un lit/dark).
Such a tape that collates market data (prices and volumes) would help serve as a definitive source of market liquidity data, and this greater transparency would support more effective capital allocation as mentioned earlier and also help enhance the attractiveness of the UK capital markets.
To provide a recent real-world example of frustration arising from the current lack of availability of complete liquidity data, one of our member issuers was preparing internal reporting on the progress of their share buyback programme, in the context of overall liquidity available in the market. This had involved share acquisitions across a number of exchanges, and required access to a complete dataset of liquidity data. However, since there was no freely available resource providing the necessary breakdown, this required multiple data analysis via their brokers.
We hope you find these comments useful. Please do not hesitate to make contact if you have any questions.
Yours sincerely,
Liz Cole
Head of Policy and Communications, The Investor Relations Society
(Email: enquiries@irsociety.org.uk, Tel: + 44 (0) 20 3978 1980)
Published 10 September, 2025