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Markets and Securities Services | Issue 46
46
Given the events that occurred at the end of
June, it is no surprise that the FCA opened
CP16/19 with a reference to the UK referendum
on EU membership and mentioned in its
statement of 24 June 2016 that “Firms must
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.”
As MiFID II is within the category of legislation
that has yet to come into effect (i.e. 3 January
2018), firms and the FCA still need to continue
with their implementation plans.
Background
CP16/19 follows on from CP15/43 published in
December 2015.
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In this earlier paper, the FCA
set out the background to the introduction
of MiFID II, and its key objectives, and mainly
covered issues relating to the new rules in
MiFID II governing the secondary trading of
financial instruments.
CP16/19, however, covers a wider range of issues
including the framework for position limits,
management and reporting for commodity
derivative contracts, and the way that firms
organise themselves to do business and comply
with their regulatory obligations.
The policy in CP16/19 was developed in the
context of the existing UK and EU regulatory
framework so the FCA says that it will keep the
proposals under review to assess whether any
amendments will be required due to changes
in the UK regulatory framework, including as
a result of any negotiations following the UK’s
vote to leave the EU.
In addition to investment managers, who else
will be affected by the proposals in the CP?
• Investment banks
• Interdealer brokers
• Stockbrokers
• Investment advisers
• Trading venues, including RMs, MTFs
and prospective OTFs
• Prospective Data Reporting Service
Providers (DRSPs)
• Corporate finance and venture capital firms
CP16/19 at a glance
In this CP, the FCA seeks views on proposed
changes to the Handbook in the following areas:
• Commodity derivatives
• Supervision (SUP)
• Prudential rules
• Senior Management Arrangements Systems
and Controls (SYSC)
• Remuneration
• Client Assets Sourcebook (CASS)
• Complaint handling (DISP)
• Whistleblowing
• Fees Manual (FEES)
Finally, to assist readers to understand the way
that MiFID II is being implemented in the UK,
the FCA has also included a Handbook “MiFID
Navigation Guide for SYSC” in Appendix 2 of
CP16/19.
Each chapter in more detail
Commodity derivatives (Chapter 2)
This chapter will be of particular relevance
to trading venues (regulated markets (RMs),
multilateral trading facilities (MTFs) and
prospective organised trading facilities
(OTFs)), MiFID investment firms trading
commodity derivatives, and users of
commodity derivatives markets, including
non-financial firms that conduct significant
amounts of trading.
MiFID II: A VIEW FROM THE UK
On 29 July, the UK’s Financial Conduct Authority (FCA) published the
second of four consultation papers presenting the planned implementation
of MiFID II (CP16/19).
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