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FCA proposes MiFID II changes

RegulationsThe UK’s Financial Conduct Authority (FCA) may change MiFID II reporting rules as part of a post-Brexit review of capital markets regulation.

The FCA’s proposals – which were issued via consultation paper CP21/9 - relate to securities research and ‘best execution’ reporting. More specifically, the FCA wants to change inducement rules relating to securities research by broadening the exemption category to include companies with a market capitalisation below £200 million.

The regulator also wants to change how the rules apply to openly available research and research provided by independent research providers.

The FCA is also proposing to remove some of the best execution obligations on forms, known formally as RTS 27 and RTS 28 reports.

The review, which is being conducted in partnership with the UK Treasury, is intended to focus on “requirements that are not achieving their objectives in an efficient way”, stated the FCA.

“Our proposals aim to reduce burdens on investment firms while having regard to growth and the competitiveness of UK financial services,” the regulator added.

According to Linda Gibson, head of regulatory change at investment services firm Pershing, the proposals demonstrate that the UK is no longer constrained by European policy making. However, she added that for firms operating in both the UK and Europe, the changes represent another example of fragmented rule-making.

“The regulators have the same aims but - in practice - different requirements for firms to implement and monitor,” said Gibson.

“As ever, the devil is in the detail and we will have to wait and see how this plays out in further consultations from both European Securities and Markets Authority and the FCA.”

Relevant parties, which include asset managers, investment advisors and research providers, have until June 23 to respond to the consultation. 

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