UK MiFID's conduct and organisational requirement

Time will tell whether the FCA will diverge radically from the MiFID II Directive or remain largely in step.

The FCA’s Policy Statement (PS) 21/20 ‘Changes to UK MiFID’s conduct and organisational requirements. The proposal shows a pragmatic direction of travel whereby requirements that are deemed too restrictive, not proportionate to the risks arising or not having beneficial effect, are restructured.

In its statement on 30 November 2021, the FCA sets out its policy on changes to the research rules and the removal of best execution reporting in Regulatory Technical Standards (RTS) 27 and 28.

From 1 December 2021, investment managers were no longer required to prepare RTS 27 and RTS 28 reports.

From 1 March 2022, investment managers and research firms will be able to exercise the options on exempting the following types of research from the FCA inducement rules on research:

• research on SMEs below a market capitalisation of £200m
• third party research on fixed income currencies and commodities (FICC)
• research supplied by research providers who do not perform execution services (and not part of a group who does so)
• openly available research

Whilst relatively limited in scope, the FCA’s policy changes and the MiFID II quick fix amendments provide an opportunity to review MiFID related policies and procedures to ensure compliance is set at the right level.

ISC can help you review existing MiFID processes and controls to achieve a ‘Clean bill of health’, adopt best practice and reduced operational and regulatory risk as part of a MiFID II focused remediation or refresh exercise.