The UK Financial Conduct Authority published an update on FCA MiFID II implementation rules. Moreover, the FCA encourages firms to submit applications for Markets in Financial Instruments Directive (MiFID) II authorization. The UK watchdog is also providing an update on the taping phone conversations by retail financial advisers.
[B]FCA MiFID II implementation rules[/B]
The near final FCA MiFID II implementation rules include changes to the financial instruments trading. These further include issues affecting transparency in trading, trading venues, and high frequency and algorithmic trading. Also, the companies leading in instruments covered by MiFID II and impacted by the changes to the activities will have to apply for authorization. In addition, the firms should also apply for variations of permission or risk being unable to operate in the UK financial market. The Markets in Financial Instruments Directive (MiFID) II will take effect after January 3, 2018.
The near final FCA MiFID II implementation rules cover:
[ul]
[li]the new category of companies – data reporting services providers
[/li][li]position limits and reporting for commodity derivatives
[/li][li]systems and controls requirements for companies providing MiFID investment services
[/li][/ul]
The UK watchdog estimates to finalize the MiFID II rules in a further policy statement in June. They are planning to cover remaining issues such as perimeter guidance, the conduct of business, and client asset protections. The Executive Director of Strategy and Competition at the FCA, Christopher Woolard, said:
[I]“MiFID II introduces substantial and wide-ranging measures designed to improve investor protection and promote market integrity. Some firms will need to be authorized 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 finalized in June this year, and therefore firms should not delay.”[/I]
MiFID II affects the organizations such as investment banks, high-frequency traders, interdealer brokers, trading venues, investment managers, stockbrokers, commodity derivatives traders, and financial advisors. Moreover, the two new types of authorized entities affected by MiFID II are listed as organized trading facilities and data reporting services providers.
[B]Update on taping phone conversations[/B]
According to the FCA statement, it updates firms on the approach the regulator will take to the recording of phone conversations by retail financial adviser firms. Looking at the business model of many of these firms, the FCA concludes that a full taping obligation is not always feasible. The regulator entity agrees on this considering consultation feedback in regards to MiFID requirements. The FCA further stresses the retail financial advisers to be in compliant with the “at least analogous” requirement. This includes taping all relevant telephone conversations. Moreover, they can even make a written note of those conversations.
Additionally, the FCA publishes a fifth MiFID II Consultation Paper that covers new rules for occupational pension scheme firms. Also, it covers the extension of the FCA powers within the enforcement guide and decision procedures and penalties manual.