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MiFID II FCA November Roundtable

The FCA yesterday published the minutes of its November 2015 MiFID II implementation roundtable. Unsurprisingly, the first questions concerned possible delay to the application date and the consequences upon other MiFID II dates and related legislation.

The FCA believes any change of application date is not linked to Level 2 completion, that the MAR timeline is unaffected and that the legislative process to change the date of entry into force may take several months. Noting the Parliament’s wish to proceed as quickly as possible to complete the implementing measures, the timetable for adoption of RTS is uncertain, but likely to be in the next two months. The FCA intends to publish its first consultation paper on MiFID II implementation in mid-December 2015; it will run for three months. The paper will mainly cover market structural issues: MTFs/OTFs, the SI regime, the new system of Data Reporting Service providers, algorithmic trading rules, and revisions to the passporting framework.

A second consultation paper will cover: conduct, client money, systems and controls and enforcement; originally scheduled for March 2016, it may be postponed pending confirmation of overall delay. The FCA also gave a progress, or lack thereof, report on Level 3 material. Work on transaction reporting, clock synchronisation, and order book data is most advanced. Work has begun on: best execution, independent investment advice, suitability/appropriateness, product governance and taping. Work on Commodity Derivatives is still at a preparatory stage. The FCA understatedly noted that several areas in MiFID II require an equivalency assessment of regimes outside the EU. The Commission is unlikely to mandate ESMA to consider these issues until MiFID II implementing measures are finalised.

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