There has been published the minutes of a MiFID II implementation roundtable held at the FCA on 17 July 2015. Among the points raised in the minutes:
- implementation concerns raised by members of trade associations could be grouped into four main categories – policy concerns, technical challenges, uncertainty over key processes and interpretation. On uncertainty over key processes there were indications that firms were finding it difficult to plan when they did not know when and how equivalence determinations would be made, how the process for applying for exemptions from position limits would work and how commercial firms would work through the process of applying to be authorised if that turned out to be necessary. In relation to interpretation there were concerns about the lack of certainty about what the legislation required in areas including the quoting obligations under the non-equity systemic internaliser (SI) regime, the boundaries between organised trading facilities and multilateral trading facilities, fields in various reporting regimes, the concept of ‘target market’ in product governance and aspects of the suitability regime;
- certain specific wholesale issues were raised including those relating to market-wide data, ‘over reporting’ and taping. On market-wide data the FCA accepted that there was a specific challenge around the authorisation of commodity derivatives firms and identification of SIs linked to the need to know overall trading activity (‘size of the market’) in the EU in financial instruments. The FCA said that this was an issue that ESMA was considering to see whether there was something it could do to assist firms and ensure consistency of approach across the EU. The issue of ‘over reporting’ of transaction reports was also raised and due to the lack of available data it was recognised that this was a possibility and is being considered by the FCA. Detailed questions were raised over the taping regime, including that the requirements raised data protection issues. The FCA is minuted to have said that the taping rules did not require the taping of face-to-face conversations. The requirements on accessibility of the information and monitoring of calls were similar to those the FCA would expect under its existing taping rules. Firms would be expected to respond in a reasonable timeframe to reasonable requests from clients for copies of tapes without a charge. Further detail will be set out in the FCA’s December 2015 consultation paper; and
- certain specific retail issues were raised including those relating to costs and charges disclosure. The FCA confirmed that the MiFID II costs disclosure requirement applied to execution-only business and that Article 33 of the existing MiFID implementing Directive already required this disclosure. The issue of trail commission was also raised and the FCA noted that it had no plans to change its current rules. The sunset clause for platforms (no payments from providers from April 2016) is affecting the availability of trail, but the FCA has no plans to alter pre-RDR trail off-platform. Further, the FCA noted that it had always expected that trail would diminish as a percentage of income over time; and that a product switch where advice is given will mean moving to advisor charging, so trail is switched off.
The minutes also note that the FCA is planning to hold its next MiFID II conference on 19 October 2015. The FCA’s intention is that the conference will be focused on the implementation of markets and wholesale issues, with communication on retail issues taking place through other means.
View MiFID II implementation roundtable minutes (17 July 2015), 10 August 2015