The FCA has published a speech by Mark Steward, FCA Director of Enforcement and Market Oversight. The speech is entitled A better view.

In his speech Mr Steward discusses recent FCA enforcement trends, particularly in the context of wholesale markets, noting that there has been an approximate 75% increase in the number of FCA investigations over the past year as a result of three factors:

  • more investigations into capital market disclosure issues;
  • the extension in scope of the reporting regime for firms, brought about by the Market Abuse Regulation, which has given the FCA a richer and more varied market picture, leading to more cases being selected for investigation; and
  • the FCA’s change in approach when deciding whether to open an investigation.

In the final part of his speech Mr Steward covers the FCA’s enforcement of MiFID II. Mr Steward states:

“We are very conscious of the obligations imposed by MiFID II on firms. Our objective has been to help firms put in place the foundations for MiFID II and to be ready for day one on 3 January 2018.

We have issued statements reminding firms not authorised for MiFID II activities or firms that need variations of permission that they needed to submit completed applications for authorisation or variations of permission by 3 July 2017 to be guaranteed their applications will be determined in time. Many firms have managed to meet this deadline, and some have not. Those firms really need to take action now.

Similarly, all legal entities and individuals acting in a business capacity who are clients of firms subject to MiFID II transaction reporting obligations and firms themselves must have a Legal Entity identifier or LEI if they wish to carry out transactions from 3 January 2018. Firms must ensure these clients have an LEI before effecting transactions covered by MiFID II on their behalf.

I know some of you want to know what our enforcement approach will be for firms that have not completely transitioned in time for 3 January 2018.

As always, we intend to act proportionately. In this context, this means we will not take a strict liability approach especially given the size, complexity and magnitude of the changes that are required to be in place. We are very aware of how much work many firms have been engaged in for a very long time now in re-tooling and preparing for next year. This means we have no intention of taking enforcement action against firms for not meeting all requirements straight away where there is evidence they have taken sufficient steps to meet the new obligations by the start-date, 3 January 2018.

Many firms that have been working well to prepare for next year and they should feel assured and confident that they can continue to work with us to meet the starting line. At the same time, we cannot create a floor for compliance below the required MiFID II standards and so our disposition is likely to be different where firms have made no real or genuine attempt to be ready or where key obligations are deliberately flouted.”

View FCA enforcement on MiFID II, 20 September 2017