FCA chief insists on UK participation in MiFID II, despite Brexit

The UK’s Financial Services Authority has asked financial firms to contribute to its second consultation paper on the implemention of the EU’s Markets in Financial Instruments Directive II, in spite of the UK’s pending exit from the European Union, in the wake of last month’s referendum. 

The Financial Conduct Authority (FCA) today  published its second consultation paper (CP16/19) on the proposed implementation of the Markets in Financial Instruments Directive II (MiFID II) in the UK, on its website.

The original MiFID, introduced in 2007, established the regulatory framework for the buying, selling and organised trading of shares, bonds, units in collective investment schemes and derivatives across the European Union.

The consultation paper published today covers a range of issues that have come to the fore since then, including position limits and reporting for commodity derivatives; systems and controls requirements for firms providing MiFID investment services, and client asset protections.

Obligations

And FCA chief executive Andrew Bailey has warned financial firms that participation is still necessary despite the result of the EU referendum. “Firms must [still] continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect,” he said.

MiFID II seeks to revise the original MiFID directive to introduce “substantial and wide ranging measures designed to improve investor protection and promote market integrity”, and to meet G20 commitments on reforming and strengthening derivatives markets, the FCA noted.

MiFID II takes effect on 3 Jan 2018, and the latest FCA consultation paper forms part of its processes to make the necessary changes to the FCA’s Handbook to implement it.

As much of MiFID II involves directly-applicable obligations, the FCA and firms need to fulfil their legal responsibilities from the point they come into force.

‘Important measures’

“MiFID II contains important measures to enhance investor protection and bolster financial stability. It reflects recent themes of UK conduct regulation, such as improved controls on the manufacturing and distribution of financial products, and it implements the international commitments the UK entered into to reform derivatives markets following the financial crisis,” added Bailey.

The FCA published its first consultation paper, covering mainly markets issues, on MiFID II on 15 December 2015 (CP15/43). The regulator said that there will be a further consultation paper later this year but that this will mostly be on changes to its Conduct of Business sourcebook.

The closing date for responses to consultation paper CP16/19 is 28 October 2016.

Read the consultation paper in full here.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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