United Kingdom (and EU regulation)

FCA publishes fourth MiFID II consultation paper

By Hannah Meakin (UK) and Imogen Garner (UK) on December 16, 2016 Posted in Regulation and compliance, United Kingdom

The FCA has published Consultation Paper 16/43: Markets in Financial Instruments Directive II Implementation – Consultation Paper IV (CP16/43).

In summary, the FCA seeks comments on proposed changes to the Handbook in the following areas:

Specialist regimes – Conduct of Business sourcebook (COBS) 18 contains a number of tailored conduct regimes for specialist types of designated investment business. The FCA proposes changes to ensure that all relevant cross references in the Handbook are identified and updated where necessary and ensure appropriate decisions are made in relation to non-MiFID investment business that has some MiFID derived conduct rules applied to it;
Tied agents – the FCA proposes reflecting the technical changes in MiFID II to the tied agents regime in its rules dealing with appointed representatives;
SME growth markets – the FCA proposes rules to apply to the SME growth markets regime, including guidance on how to register as an SME growth market;
Market data – the FCA is proposing some guidance on the scope of the Approved Reporting Mechanism (ARM) regime, the circumstances in which trading venues can make transaction reports using ARMs and that Data Reporting Service Providers (DRSPs) should be required to undertake an annual assurance review of their compliance with their obligations under the DRSP regime, verified by a member of the management body of the DRSP. The FCA is also proposing guidance on certain aspects of the use of ARMs;
Miscellaneous changes to the Handbook – the FCA proposes changes to various Handbook modules. These include changes to the Perimeter Guidance manual, clarification of the territorial scope of rules on remuneration and training and competency, amendments to Banking Conduct of Business sourcebook to reflect earlier proposals in relation to structured deposits;
Fees – the FCA proposes opening the authorisation gateway in January 2017 to assist firms. As such, it proposes a transitional rule for fees to deal with the period between when it starts accepting applications for authorisation related to the changes in MiFID II and the point at which legislation changes to enable it to collect fees for the changes of scope; and
Forms – the FCA provides feedback on the changes to Form A consulted on earlier.

The deadline for comments on CP16/43 is 17 February 2017, except for chapter 7 (Fees manual) which is 16 January 2017.

The FCA states that it will finalise the changes to its Handbook to implement MiFID II in the first half of 2017. It anticipates publishing two Policy Statements. The FCA aims to publish the first Policy Statement in March 2017 and it will mainly cover matters consulted on in its first Consultation Paper on MiFID II (CP15/43). The FCA aims to publish the second Policy Statement in June 2017 and this will cover all other issues on which the regulator has consulted on.

View CP16/43: Markets in Financial Instruments Directive II implementation – Consultation Paper IV, 16 December 2016