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Compound Growth

6th March 2015

Countdown to MiFID II

Today the FCA issued a Discussion Paper that informs of their schedule for implementing MiFID II, set to come into effect for all investment firms on 3rd January 2017.

Whilst the implementation is a little way off yet, the FCA acknowledges that due to discrepancies between MiFID’s independence threshold and that of its own there are some policy choices that it has to make, so is seeking industry opinion before it finalises the rules following consultation at the end of the year.

The closing date for responses to the Discussion Paper is 26th May 2015. The Regulator will then take just over 12 months to finalise the rules for implementation, which will be advised upon next summer.


The FCA is particularly interested in hearing from discretionary investment management firms, stockbrokers and others that provide recommendations to clients on shares, bonds and/or derivatives, financial advisers as well as trade bodies and consumer groups.

In particular the FCA is canvassing opinion on:

How costs and charges disclosure could be implemented and the extent to which provisions should be applied to insurance-based products and pensions

Whether it should ban third party rebating for discretionary investment management firms as well as potential inducement rules for advisers, discretionary managers and other firms

Details on the restrictions placed upon non-complex products and the application of the appropriateness test

Discussion on whether sales staff remuneration rules should be applied to firms not under MiFID II

How adviser independence should be implemented on different shares, bonds and structured deposits

Application of recording exemptions to firms

How advice on structured products is treated domestically

The FCA’s Timeline to MiFID II:

Throughout this year and next the FCA will be consulting upon and finalising their implementation measures for MiFID II as follows:

Useful MiFID II Links:

Related Reading:

Markets in Financial Instruments Directive II (MiFID II)

MiFID II Overview

Designed to strengthen protection for retail investors across the EU, by:

imposing limits to the use of commissions,

stricter requirements for product design and distribution,

new product intervention powers,

improved disclosure of costs and charges, and

conditions for the provision of independent advice.

Several of the new rules also address risks in the wholesale market, such as position limits in commodity derivatives markets, controls on algorithmic trading and the regulation of data reporting services.

MiFID II also focuses on organisational requirements and conduct of business standards and it is on these particular areas that policy decisions need to be made by the FCA.

Timeline to MiFID II


FCA issued a Feedback Statement on MiFID II and potential changes to dealing commission regime


FCA Discussion Paper and ongoing discussion in areas where the FCA have to make a choice on policy

Summer 2015:

EU legislation on MiFID II implementing measures is adopted and formal approval process begins


FCA MiFID II conference


FCA Consultation on implementing MiFID II requirements

Early 2016:

EU legislation on MiFID II implementing measures is finalised and published by FCA


FCA Policy Statement on the Rules required to implement MiFID II


MiFID II rules come into effect for ALL Investment firms


MiFID II rules come into effect for ALL Investment firms (extension as advised by the European Commission in 2016)

Comment from the FCA:

Director of policy at the FCA, David Geale, said:

“MiFID is a very significant piece of legislation with implications for many of the firms that we regulate and they all need to start planning for the directive’s implementation.

We have policy choices to make on some areas of how the directive applies in the UK, but not in all, and this paper sets out what those are. In those areas where we can be flexible in our approach, we want firms, large and small, to have an opportunity to give us their early views on the changes we are considering”

** Update March 2016: Since the below was written, the European Commission has confirmed implementation of MiFID II is to be extended to 3rd January 2018. Click here to read about the MiFID II extension.**