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12th October 2016

MiFID II Implementation: Addressing Investor Protection

The FCA has now published their third consultation paper on the implementation of MiFID II - the revised Markets in Financial Instruments Directive.

Due to come into effect on 3rd January 2018, MiFID II looks to improve and enhance the rules that govern the way capital markets function as well as contribute to the reform of derivatives markets and strengthen the transparency of trading. Thus, under MiFID II, it is hoped that financial markets will become more efficient, transparent and responsible.

The revised Markets in Financial Instruments Directive also looks to strengthen the investor protection regime for retail and wholesale investment business.

The FCA’s previous MiFID II consultation papers discussed mainly market issues (first MiFID II consultation paper CP15/43 in December 2015) and a range of issues including commodity derivatives and systems and controls requirements (second MiFID II consultation paper CP16/29 from July 2016).

The FCA's third consultation paper however, now looks to focus upon a wide range of conduct of business issues that will increase retail investor protections with the following key proposals made:

Strengthening inducement and research rules

To drive better competition and ensure research is only produced and consumed where it adds value to investment decisions.

Implementing requirements of full disclosure of costs and charges.
Guidance on the responsibilities of providers for the fair treatment of customers.
Extending the requirement of telephone taping to financial advisers

With the aim of providing benefits to both firms and their clients in resolving disputes in a quick and cost effective manner.

The FCA's third MiFID II consultation is open until 4th January 2017, except for comments on Chapter 16 ( the Supervision manual, authorisation and approved persons), which have an earlier response deadline of 31st October 2016.

It is also expected that the FCA will publish a fourth MiFID II consultation paper before the end of the year.

MiFID II Compliance Support

If your firm is 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.