Don’t get miffed, get MiFID II authorisation
The UK’s Financial Conduct Authority (FCA) has published its near final rules on the Markets in Financial Instruments Directive (MiFID) II and encourages firms to submit applications for authorisation.
These rules include changes to the trading of financial instruments – such as issues affecting trading venues, transparency of trading and algorithmic and high frequency trading.
Christopher Woolard, executive director of strategy and competition at the FCA, says it “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”.
Firms impacted by the changes should now apply for authorisation or for variations of permission, or risk being unable to operate in the UK market after 3 January 2018, when MiFID II takes effect.
The near final rules cover the new category of firms – i.e. data reporting services providers; position limits and reporting for commodity derivatives; and systems and controls requirements for investment firms.
In June, the FCA plans to finalise the MiFID II rules in a further policy statement. This will cover remaining issues which include conduct of business, perimeter guidance, and client asset protections.
Organisations affected by MiFID II include investment banks, interdealer brokers, high frequency traders, trading venues, stockbrokers, investment managers, commodity derivatives traders and financial advisers, and the two new types of authorised entity: organised trading facilities and data reporting services providers.
The FCA is also providing an update on the taping of telephone conversations by retail financial advisers.
Having considered consultation feedback in the context of MiFID requirements, the FCA says it agrees that the business model of many of these firms means that a full taping obligation may not always be appropriate.
The FCA will allow retail financial advisers to comply with the “at least analogous” requirement by either taping all relevant phone conversations or taking a written note of those conversations.