50 / 72
Markets and Securities Services | Issue 46
48
Firms will also need to review whether they
should revise existing passport notifications.
The MiFID implementing regulation is
Commission Regulation (EC) 1287/2006.
5
The
transaction reporting obligations are in Article
26 of MiFIR
6
and RTS 22.
7
The passporting
provisions are in Articles 34 and 35 of MiFID II.
Prudential Rules (Chapter 4)
This chapter will be relevant to investment
firms that wish to operate an OTF and to
“local” firms currently exempt from MiFID.
A number of the prudential rules in the FCA
Handbook use terms that appear in MiFID.
With the implementation of MiFID II, certain
references will need to be updated or removed.
This mainly affects three areas:
proposes deleting references to a “local” in
Chapter 3 of IPRU (INV), which sets prudential
requirements for various categories of firms
other than most categories of MiFID investment
firms, and in SUP 16.12.
The last proposal is a consideration of whether
to delete certain references to MiFID in Chapter
3 of IPRU (INV) that are no longer needed
because the relevant provisions now sit in the
Capital Requirements Regulation (CRR) and are
not included in MiFID II.
10
FCA description of implications for firms in CP16/19
These proposals are consequential in nature,
resulting from scope changes in MiFID II.
Those relating to OTFs are to ensure that the
correct CRR prudential treatment is applied
to investment firms that conduct this new
investment service.
The changes relating to a “local” firm reflect the
fact that the current exemption under MiFID is
not being carried across to MiFID II.
Senior Management Arrangements, Systems
and Controls (SYSC) (Chapter 5)
This chapter should be reviewed by
common platform firms (i.e. BIPRU firms,
banks, building societies, MiFID investment
firms, designated investment firms, IFPRU
investment firms, exempt CAD firms,
local firms and document account fund
operators). It will also be of interest to
Article 3 MiFID firms such as retail financial
advisers, boutique corporate firms and
venture capitalist firms operating in the UK,
as well as UK branches of non-EEA firms
(third country firms).
This chapter of CP16/19 explains the changes
that the FCA is proposing to make to SYSC
to implement Article 9 (management body);
Article 23 (conflicts of interest); and Article 16
(organisational requirements).
The FCA explains the changes to SYSC 4 — 10,
which form the common platform requirements
for common platform firms, and is relevant to
UCITS investment firms and AIFM investment
firms in respect of their MiFID business.
11
Article 3 MiFID firms (Article 3 firms)
The large number of Article 3 firms that will
now be captured should understand the new
The FCA proposes to update the prudential
classifications to reflect the addition of the
new category of investment service in MiFID II
of operating an OTF and to ensure that an
investment firm operating an OTF, as with
a firm operating an MTF, is classified as an
IFPRU 730k firm
8
, in line with the Capital
Requirements Directive (CRD) IV.
9
Secondly, the exemption in MiFID for a “local”
is not being carried across to MiFID II. The FCA
Handbook Glossary
(includes term "local").
1
Prudential Sourcebook
for Investment Firms
(IFPRU), wherein the
prudential classification
of a firm is affected if it
operates an MTF.
2
Chapter 3 of the Interim
Prudential Sourcebook for
Investment Business (IPRU
(INV)) makes certain
references to MiFID.
3
Prudential
Rules