UNITED KINGDOM: Changes to UK MIFID’s Conduct and Organisational Requirements

Thursday April 29 2021

On 28^th April 2021, the Financial Conduct Authority (FCA) published consultation paper (CP21/9) on changes to UK MIFID’s conduct and organisational requirements.

The FCA is seeking feedback on proposals to change existing inducements rules relating to research and the removal of two sets of reporting obligations on firms (RTS 27 and RTS 28). Responses are required by 23 June 2021.

This involves looking at the UK’s regulatory regime for capital markets to develop a package of changes. These changes are to ensure the regulation of investment business in the UK is adapted to the broad and deep structures of UK markets, underpinned by the highest regulatory standards that promote market integrity, effective competition and consumer protection.

This proposal will affect:

• investment firms and market operators in the UK
• banks and Collective Investment Scheme operators providing investment services
• persons providing investment advice and reception and transmission of orders who did not opt into MiFID (‘Article 3’ firms)
• persons providing research that we do not authorise.

The FCA shared objectives with the Treasury for the capital markets reform work are to have a regime of capital markets regulation with the following characteristics.

• High standards. A regime characterised by robust standards that are effectively enforced, adhering to the highest international standards and ensuring that market participants can operate in it with confidence and maintain trust in the operation of the market.
• Supporting economic growth. A regime that supports growth in the real economy, innovation, entrepreneurship and wealth creation across society, and facilitates investment, both in the short-term (by supporting the economic recovery from COVID-19) and sustainable long-term (as we transition to a low-carbon economy).
• Open and competitive markets. A regime that allows a range of participants (domestic, international, public/private sector organisations) to access UK markets easily, appropriately and at a low cost, with high levels of competition and innovation, cementing the UK’s position as a global hub for wholesale markets business.
• Fair and proportionate. A regime that is underpinned by proportionate standards that are focused on outcomes rather than prescriptive rules and strong infrastructures that enable market participants to operate in the market without unnecessary friction and costs.

With the Treasury the FCA have already met with market participants this year to discuss capital markets reform. This follows on from discussions about possible changes to UK MiFID over the previous 18 months, including discussing issues raised in consultations by the German Finance Ministry, the European Commission and European Securities and Markets Authority (ESMA). This dialogue will continue throughout this year as we look in detail at a range of issues and ideas.

Click on the link for further information.