05 July 2017
London
Reporter: Stephanie Palmer

FCA reveals final MiFID II rules


The UK’s Financial Conduct Authority (FCA) has revised some of its proposals on implementation of the second Markets in Financial Instruments Directive (MiFID II), issuing its final rules and guidance on the directive.

The FCA’s policy statement sets out the ways in which the UK’s policy will go beyond the requirements of the EU legislation, but noted that the authority has an obligation to consider the government’s economic policies when implementing it.

It says: “We have considered the benefits to consumers and to the integrity of the UK market of our proposals, set against the costs for firms and therefore overall the extent to which the UK remains attractive as a location for internationally active financial institutions.”

Particularly, the statement responded to consultation paper CP16/29, released in September 2016, which received 211 responses and caused the FCA to revise some of its proposals.

Inducement rules in relation to research will still be applied to collective portfolio managers, not only to investment firms that are subject to MiFID II.

However, the FCA amended its original proposal around how quickly charge deductions should be passed into an RPA, and clarified that it does not intend to require investment managers to have a single RPA per research budget

The FCA has reduced the threshold for the size of portfolio a local authority should have in order to opt in to professional client status, making it easier for local authorities acting on behalf of local government pension schemes to gain this status.

Also, best-execution rules under MiFID II will not be extended to alternative investment fund managers, as was originally proposed.

However, the FCA maintained that collective investment undertakings that are not UCITS will not be automatically considered either complex or non-complex. This includes non-UCITS retail schemes and investment trusts.

The statement said: “Most of what is in the MiFID II conduct provisions is familiar in the context of the existing UK regulatory framework. But, as well as the specific adjustments firms will need to make, their implementation presents an opportunity for firms to consider their existing approach to compliance and their efforts to put the interests of clients at the heart of what they do.”

“In this regard, having an effective governance structure and the right culture are crucial to implementing MiFID II successfully.”

The statement also noted that implementation of the directive before the 3 January 2018 deadline represents a challenge for firms, “particularly given that important issues concerning the interpretation of the legislation are still being resolved”.

However, it said: “We expect firms to take reasonable steps to meet this deadline.”

It went on: “Firms who still need to apply for authorisation or variation of permission should prioritise as a matter of urgency their submission of complete applications.”

It added: “Such firms must have contingency plans in the event that by 3 January 2018 they do not have the required permissions.”

More news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
NEX Regulatory Reporting made trade repository under EMIR
24 November 2017 | London | Reporter: Jenna Lomax
The trade repository, which will be based in Stockholm, Sweden, will prepare NEX for its trade operations post Brexit
Al Ramz Capital gains short selling licence
24 November 2017 | Abu Dhabi | Reporter: Jenna Lomax
Al Ramz Capital is one of the first investment providers to offer short-selling in the UAE
BNP Paribas bolsters its senior agency lending roster
24 November 2017 | London | Reporter: Drew Nicol
Adnan Hussain moved from RBC to take up a role as global head of agency lending and head of market and financing services in the UK for BNP Paribas
Hedge funds continue 2017 run
23 November 2017 | Madrid | Reporter: Drew Nicol
Global AUM of hedge funds rose 24 percent to $3.2 trillion in the past two years, according to data captured by IOSCO’s latest market survey.
Goldman Sachs appointed by Thrivent for agent lending
23 November 2018 | Minneapolis | Reporter: Jenna Lomax
Thrivent Financial has appointed Goldman Sachs as it new lending agent
ICMA maps repo and cash bond operations
22 November 2017 | Zurich | Reporter: Zsuzsa Szabo
ICMA has launched a free-to-read mapping directory for more than 80 technology solutions for repo and cash bond operations
FCA publishes MiFID II guide
22 November 2017 | London | Reporter: Jenna Lomax
The guide focuses on the regulatory regime in MiFID II for trading venues and data reporting services providers