MiFID II – FCA publishes near final rules and encourages firms to submit authorisation applications

The FCA has published near final rules on the implementation of the MiFID II. These include changes to the trading of financial instruments including issues affecting trading venues, transparency of trading and algorithmic and high frequency trading.

The FCA is also providing an update on the taping of telephone conversations by retail financial advisers.

Firms impacted by the changes to the activities and instruments covered by MiFID II 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 – data reporting services providers
  • position limits and reporting for commodity derivatives
  • systems and controls requirements for firms providing MiFID investment services

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.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:

MiFID II introduces substantial and wide ranging measures designed to improve investor protection and promote market integrity.

“Some firms will need to be authorised 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 finalised in June this year, and therefore firms should not delay.

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.

See full new release here