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5th April 2017

FCA Publish near-Final MiFID II Rules

On Friday, 31st March 2017, the FCA published their near final rules on the implementation of the revised Markets in Financial Instruments Directive – MiFID II.

Published as a Policy Statement (PS17/5), these rules set out the changes to the trading of financial instruments including issues that will affect trading venues, transparency of trading as well as high frequency trading. These issues were previously consulted upon by the FCA, largely in their Consultation Papers CP15/43 – that covered largely market issues - and CP16/19 – that covered systems and controls, client asset and commodity position limits.

In summary, this first policy statement and near final rules cover:

systems and controls requirements for firms providing MiFID investment services
position limits and reporting for commodity derivatives
the new category of firms - data reporting services providers

Other items addressed within the FCA’s MiFID II Consultation Process will look to be finalised in a few months’ time when the FCA plan to publish a further policy statement in June.

This second policy statement will aim to cover:

Conduct of business;
Changes to the scope of the application of the principles for business & perimeter guidance; and
Client Asset Protections

What should Firms be doing now?

The FCA has taken this opportunity to remind firms that they need to continue with their preparations for MiFID II which will be implemented on 3 January 2018. These preparations include the submission of any applications for authorisation or variation of permission that they might need to make as soon as possible within the FCA’s Connect system.

As the Executive Director of Strategy and Competition at the FCA, Christopher Woolard, said:

“Some firms will need to be authorised for the first time, others will need to vary their current permissions.

“It is critical that those firms submit their applications now. The FCA does not expect to make any significant changes to these rules before they are finalised in June this year, and therefore firms should not delay.”

Recap on who will be affected by MiFID II:

The types of organisations that will be affected by MiFID II include:

investment banks;
interdealer brokers;
firms engaging in algorithmic and high-frequency trading;
trading venues including regulated markets, multilateral trading facilities, and prospective organised trading facilities;
prospective data reporting service providers;
investment managers;
commodity derivatives traders;
stockbrokers;
investment advisers; and
corporate finance firms and venture capital firms

MiFID II Compliance Support

If you are currently reviewing how MiFID II will impact your business and require support or assistance in planning for MiFID II implementation, please contact our experienced regulatory & compliance support team, who would be happy to help.