As the financial services industry is well aware, MiFID II went live at the start of this year. Financial firms and markets didn’t grind to a halt, as some had feared, but significant issues and uncertainties persist. The FCA has indicated that it is not inclined to pursue enforcement action (at least initially) against firms who made a genuine attempt to be ready for the new obligations. However the FCA’s Chief Executive, Andrew Bailey, has also been keen to emphasise that this does not amount to regulatory forbearance and that firms are expected to comply with their obligations. The FCA has already signalled its intent to carry out thematic work later in 2018 to assess firms’ compliance with certain key requirements.
Somewhat predictably, given the breadth of MiFID II, various inconsistencies and issues of interpretation have materialised*. Consequently, just a few months into the new regime, certain approaches to particular requirements are already hardening into industry best practice or, if not, at least what may be perceived as acceptable compromise. In some places a void still exists where firms are struggling to find solutions. Others may be wondering if their new internal controls are too risk-adverse. In other words, nearly everyone is asking whether they are industry outliers or in the middle of the pack.
As the dust starts to settle on so many MiFID II issues, you may wish to consider the opportunity, during the quieter summer months, to reduce regulatory risk by conducting a MiFID II Post-Implementation Review. ACA’s experienced team of consultants are leveraging the substantial knowledge gained from helping clients in their MiFID II preparations and post-implementation work to-date, to conduct thorough reviews of firms’ processes and procedures resulting in a formal, independent confirmation where sufficient steps have been taken in all necessary areas, and to help firms ensure they have fully engrained this important regulatory change throughout their business, getting ahead of the anticipated FCA supervisory action.
These independent reviews are designed to assist your compliance, operations and risk staff and ensure MiFID II is implemented appropriately, in a balanced way which is empathetic to your business activities and resilient to independent scrutiny.
For More Information
To discuss an independent MiFID II Post-Implementation Review, contact Ron Weekes or your normal ACA contact.
EXAMPLES OF REGULATORY UNCERTAINTY SINCE IMPLEMENTATION:
Research and Inducements:
- What is “research” and what can be paid for out of the Research Payment Account?
- How should firms assess research for value for money?
- How should corporate access be treated?
- What is a minor non-monetary benefit?
- What are the expectations on monitoring fixed income and OTC transactions?
- Is TCA, or some sort of automated process, a requirement or at least an expectation?
- Who/what exactly needs to be recorded?
- What are the new requirements on monitoring conversations?
- What are the regulatory expectations when a firm is both manufacturer and distributor?
Costs and Charges:
- What level of detail is required?
- What should firms be doing to monitor whether their ARMs are reporting accurately?
Post-Trade Reporting and Systematic Internalisers (SI):
Can I rely on an SI to report?