On 15 July, the UK Financial Conduct Authority (FCA) published its 2021/22 Business Plan. The FCA’s – still fairly new CEO – Nikhil Rathi took the opportunity to deliver an ambitious and wide ranging statement. He set out the new and existing challenges that the FCA faced as well as the clear changes he, and his executive team, were looking to make to the way in which the regulator operates. Continue reading
Overview and recap
On 19 April 2021, the FCA published CP 21/7: ‘A new UK prudential regime for MiFID investment firms’. This Consultation Paper (CP) introduces the FCA’s second tranche of proposed rules to introduce the Investment Firm Prudential Regime (IFPR) in the UK. Firms following the progress of the reforms will recall that this latest consultation follows CP20/24: ‘A new UK prudential regime for MiFID investment firms’ (December 2020), covering the first tranche of proposed new rules, including overall scope of application of the regime, and certain components of the own funds and reporting requirements. Continue reading
In this blog post, we round-up forthcoming developments in the UK and at EU and International levels in financial services regulation which are expected for September 2020.
On 23 June 2020, the FCA published its long-awaited Discussion Paper on a new prudential regime for MiFID investment firms, to be based on the EU Investment Firms Directive and Regulation (“IFD” and “IFR” respectively), which are due to be implemented in June 2021 (see our blog post).
On the same date, HM Treasury published a related Policy Statement on prudential standards in the Financial Services Bill, which complements and sets the parameters for the FCA’s approach as outlined in the Discussion Paper. Continue reading
Having initially delayed its planned consultation exercise to allow the financial services sector to focus on responding to Covid-19, the International Organization of Securities Commissions (IOSCO) subsequently found the pandemic a catalyst to proceed. Therefore, at the end of May, IOSCO launched its consultation on proposed updates to the 2005 Outsourcing Principles for Market Intermediaries and the 2009 Outsourcing Principles for Markets; feedback on the proposed new Outsourcing Principles (OPs) is requested on or before 1 October 2020. The decision to proceed reflects the acknowledgement that outsourcing is a key element for consideration when assessing operational resilience across the sector.
This post gives a high level summary of the consultation, with a link to our briefing that focuses in more detail on: the scope of application; IOSCO’s definition of outsourcing; intragroup arrangements; concentration risk; and access and audit rights. To provide additional context to IOSCO’s proposals, the associated briefing also catalogues relevant proposals and initiatives which are running concurrent to the consultation exercise.
First published on Thomson Reuters Regulatory Intelligence on 15 July 2019.
This third article of a series on cryptoassets focuses on personal account dealing (PAD) policies and procedures. This topic is important not only for firms themselves but also for individual staff who have entered into or are considering entering into cryptoasset transactions on their own behalf.
Authors: Hannah Cassidy, Clive Cunningham, Natalie Curtis, Javier de Carlos, Katherine Dillon, Matthias Gippert, Leopoldo Gonzalez Echenique, Vincent Hatton, Patricia Horton, Pierre Le Ninivin, Kai Liebrich, Natasha Mir, Stuart Paterson, Fiona Smedley, Jenny Stainsby, Jennifer Xue
Many regulators view their ability to intervene as one of their key supervisory tools to reduce harm in cases where there is a risk of significant consumer detriment or threat to financial markets.
At the same time, many jurisdictions have put in place product governance regimes for financial services firms which aim to avoid, or at least mitigate from an early stage, any potential risks of failure to comply with investor protection rules. In particular, the design and distribution obligations under these product governance regimes aim to overcome the limitations of disclosure and ensure that firms which manufacture and distribute financial products take some responsibility and adopt a more targeted customer-centric approach.
The stages of development, level of detail, scope and coverage of regulators’ product intervention powers, and the product design and distribution obligations under product governance regimes, vary across jurisdictions.
Our guide (which can be found here) summarises the frameworks in selected jurisdictions, allowing a high-level comparison of the different regimes and offering a glimpse of the direction of travel.
The European Securities and Markets Authority (ESMA) is consulting on the implementation of the revised Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). MiFID II and MiFIR are expected to come into application by end 2016/early 2017, and will apply across the European Union, extending also to member states of the European Economic Area under the European Economic Area Agreement. For a more detailed briefing, click here.
The European Commission has published new questions and answers on several issues related to the Markets in Financial Instruments Directive (MiFID). The answers consider:
- whether a London Metal Exchange Warrant constitutes a “transferable security” within MiFID;
- the application of MiFID to Binary Options;
- the submission of suitability and appropriateness questionnaires;
- the use of appropriateness testing for clients who are using only ancillary services; and
- information to clients about costs and charges.
To view the MiFID Q&A website, please click here.
The European Commission has now published its final proposal for a Regulation on mandatory pre-sale disclosures for Packaged Retail Investment Products (PRIPs). The Regulation aims to close gaps and inconsistencies in current rules across Europe by introducing uniform rules on product disclosures. The Commission last consulted on these reforms in January 2010, so the draft Regulation has been a long time coming.
Our briefing summarises the new PRIPs Regulation and considers the interplay with disclosures required by the RDR and revised MiFID. This Regulation is likely to considerably increase the costs and resource already being expended in implementing related rules under the FSA’s RDR and the Commission’s review of MiFID (MiFID II). Estimated industry compliance costs are €171 million initially and €14 million per year thereafter.