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MiFID II: FCA’s Fourth Consultation

22nd December 2016

Fourth Consultation Published

The FCA has now published their fourth consultation on MiFID II implementation - Consultation Paper CP16/43.

• CP16/43 Markets in Financial Instruments Directive II Implementation – Consultation Paper IV

This is set to be the final consultation paper with regards to the implementation of MiFID II by the UK regulators and covers various aspects of the new Directive set to be implemented in 2018, in particular those relating to:

• specialist conduct of business regimes;
• tied agents;
• market data;
• SME growth markets; and
• miscellaneous changes to the Handbook.

In addition, the FCA is proposing a transitional rule for fees relating to draft applications for authorisation in MiFID II that will affect the FCA Fees Manual (FEES) and some new guidance on transaction reporting, which includes the use of Approved Reporting Mechanisms (ARMs) by trading venues.

Whilst the majority of items for the consultation should have comments returned to the FCA by 17th February 2017, those on the new fees proposals should be returned 1 month earlier, by the deadline of 16th January 2017.

MiFID II Application & Notification Guide

In this latest MiFID II consultation, the Financial Conduct Authority is also encouraging firms to prepare for authorisation under the new regime early next year. With this in mind, the FCA is intending to publish a MiFID II Application & Notification Guide early in 2017 to assist firms that wish to apply for authorisations and variation of their permissions linked to those under MiFID II. The guide will also contain the new forms that are required for this purpose.

Previous FCA MiFID II Consultations:

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. Although originally set to be implemented next year, it will now come into effect on 3rd January 2018.

Whilst this fourth MiFID II consultation deals with a series of broadly technical FCA Handbook changes the previous three FCA consultations dealt with the following summarised aspects relating to the implementation of MiFID II:

• Consultation 3 - CP16/29 – Conduct of business issues, product governance and perimeter guidance. (Published in September 2016, this consultation is still open for comments on all proposed changes except those to the Supervision manual. Closing date 4th January 2017)
• Consultation 2 - CP16/19: – Commodity derivatives and systems and control requirements. (Published in July 2016, consultation now closed.)
• Consultation 1 - CP15/43 - Market issues. (Published in December 2015, consultation now closed)

This fourth consultation will affect a broad range of authorised firms in addition to those entities that trade commodity derivatives yet are unregulated. As such, all of the following entities should familiarise themselves with the contents of this consultation and comment should they feel it necessary:

• banks
• investment firms 
• tied agents 
• depositaries  
• investment companies with variable capital
• UCITS and AIFM qualifiers
• service companies
• authorised professional firms (APFs)
• recognised investment exchanges
• prospective Data Reporting Service Providers
• trustee firms
• firms conducting Lloyd’s market activities
• occupational pension scheme firms
• energy and oil market participants
• firms conducting corporate finance business or stocklending activities; and
• alternative investment fund managers and undertakings for collective investments in transferable securities management companies 

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.

Other MiFID articles:

• MiFID II: FCA’s Fourth Consultation
• MiFID II: Pre-trade transparency waivers
• MiFID II Consultation addresses Investor Protection
• Sep16 MiFID II Latest Roundtable
• MiFID Investment Firms Register
• Feb16 MiFID II Roundtable update
• MiFID II for Investment Managers
• MiFID II: FCA Consults upon Secondary Trading of Financial Instruments
• Dec15: Complex Products & Appropriateness Testing under MiFID II
• Oct15 MiFID II: Update on ‘The Road to MiFID’
• Aug15 Update to MiFID II Taping Rules for Financial Advisers
• MiFID II Overview

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