Changes to UK MiFID’s Conduct and Organizational Requirements

The FCA published CP21/9 on changes to UK MiFID’s conduct and organizational requirements. Key proposals include changes to existing rules relating to research and best execution reports.

Research

The FCA proposes to extend the scope of minor nonmonetary benefits to include research on small and medium-sized enterprises with a market capitalization value below £200 million and fixed income, currencies and commodities research, so that it is not subject to the inducement rules. The FCA has also made rule changes on how inducement rules apply to openly available research and research supplied by independent research providers.

Best Execution Reports

The FCA proposes to remove two sets of reporting obligations on firms:

• The obligation on execution venues to publish a report on a variety of execution quality metrics to enable market participants to compare execution quality at different venues (known as RTS 27 reports).
• The obligation on investment firms that execute orders to produce an annual report setting out the top five venues used for executing client orders and a summary of the execution outcomes achieved (known as RTS 28 reports).

The proposals will apply to:

• Investment firms and market operators in the UK 
• Banks and collective investment scheme operators providing investment services
• Persons providing investment advice and reception and transmission of orders who did not opt in to MiFID (“article 3” firms)
• Persons providing research that the FCA does not authorize

The full CP is available here.