On 2 January 2026, the Financial Conduct Authority (FCA) published an explanatory statement under Article 28a(9) of the UK Markets in Financial Instruments Regulation
(600/2014) (UK MiFIR) relating to the FCA’s Direction on the Derivatives Trading Obligation (DTO).
Background
On 31 December 2024, the FCA issued a new Direction under Article 28a of UK MiFIR to modify the UK DTO, replacing the expiring Transitional Direction, which allows firms subject to the UK DTO, trading with or on behalf of EU clients subject to the EU DTO, to execute those trades on EU trading venues, provided certain conditions are met.
Overview
Under Article 28a(9) of UK MiFIR, where a Direction remains in effect for longer than 6 months, the FCA must publish a statement explaining why the conditions under Article 28a(1)(a) and (b) continue to be met to extend it for a further 6 months, this statement covers the 6-month period to 30 June 2026:
- Article 28a(1)(a): The FCA set out that it considers there is an ongoing need to prevent or mitigate market disruption in the absence of mutual equivalence between the UK and EU, and therefore maintains that the Direction is necessary to prevent or mitigate disruption for market participants caught by a conflict of law between the EU and UK DTOs, in particular branches of EU firms in UK.
- Article 28a(1)(b): The FCA also set out that it considers that the Direction continues to advance its operational objectives under section 1B(3) of Financial Services and Markets Act 2000 by preventing or mitigating disruption for market participants caught by a conflict of law between the EU and UK DTOs in the absence of mutual equivalence between the UK and EU.
As a result, the FCA confirmed that the Direction remains in effect because both conditions in Article 28a(1)(a) and (b) continue to be satisfied.
Next steps
The FCA also confirmed that a further review will be conducted at the conclusion of the next 6- month period, after which, if the Direction is still in force it will issue a new statement.