UK MiFID conduct and organisational requirements - Thistle Initiatives

Written by Thistle Initiatives - Compliance consultancy | May 3, 2021 11:00:00 PM

What has happened?

The FCA is considering, together with HM Treasury, reforms to capital markets to ensure that the UK regulatory regime is adapted to market structures and maintains the highest regulatory standards. Its Consultation Paper CP 21/9, published in April 2021, is the first output of that work and covers changes to two areas of the conduct and organisational rules in UK MiFID; research and trade execution reporting.

What do you need to do?

The proposals in this consultation are an initial set of changes within the wider context of the capital markets reform work. The FCA is proposing changes to the UK MiFID conduct and organisational requirements in two areas: research and trade execution reporting.

This CP applies to investment firms and market operators in the UK, banks and collective investment scheme operators providing investment services, firms providing investment advice and reception and transmission of orders that did not opt into MiFID (Article 3 firms), and firms providing research that the FCA does not authorise. The FCA is asking for comments on the CP by 23 June 2021.

Concerning SME and Fixed Income, Currencies and Commodities (FICC) research, the FCA proposes to change the existing inducements rules relating to research. These changes broaden the list of what are considered minor non-monetary benefits to include research on SMEs with a market cap below £200m and FICC research so that it is not subject to the inducement rules. The FCA has also made rule changes on how inducement rules apply to openly available research and research provided by independent research providers.

The FCA also proposes to remove two sets of execution reporting obligations on firms, namely;

the obligation on execution venues to publish a report on a variety of execution quality metrics to enable market participants to compare execution quality at different venues (known as the RTS 27 report), and
the obligation on investment firms that execute orders to produce an annual report setting out the top five venues used for executing client orders and a summary of the execution outcomes achieved (known as the RTS 28 report)

How can we help you?

If you’d like to know more about how we can help you with your research or execution reporting arrangements, or any other regulatory compliance issues, our expert team is here to help.

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