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MiFID II Compliance and Transaction Reporting Reviews Featured in FCA 2019/20 Business Plan

The FCA has published their 2019/20 Business Plan. The document features the regulator’s focus of supervisory priorities for this year and next. Included are eight priorities across the seven sectors that the FCA regulates. Not surprising, MiFID II compliance and review of data was included in areas the FCA will be focusing on.

Specifically, the FCA mentioned how they are using counterparty, price and trading data from Transaction Reporting (MiFIR). According to the FCA, reports are being used to detect market abuse and supervisory of transactions in cases of conflicts of interest among trading parties. The FCA’s review of MiFIR data for market abuse and execution quality is an item that was previously covered in the Cappitech blog in January (more on this).

MiFID II implementation review

The FCA also noted that it will be conducting thorough reviews of how investment firms have implemented MIFID II and effects of the regulation. Current and future reviews regarding MIFID II covered by the Business Plan include:

Asset Managers – MIFID II introduced Packaged Retail and Insurance-based Investment Product (PRIIP) regulation. The new framework created standardized formats related to how various investment products are marketed to investors. Included is information related to risk/reward and customer suitability. The FCA stated that they will be reviewing how asset managers are implementing the PRIIPs standards and marketing of new products.

Wholesale Markets – The FCA reported that they support the growth of wholesale markets as a driver of liquidity for government, institutional and retail trading and investment activity. As the market grows they believe in the need for greater transparency from these participants to achieve healthy competition. MIFID II and Market Abused Regulation (MAR) has created standards to help achieve this transparency. However, with the known difficulties to comply with these regulations, the FCA will review negative impacts of MIFID II and MAR to the wholesale markets and whether it has reduced competition and increased market data costs in different trading sectors.

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Written By

Ron Finberg

Ron Finberg

Arriving to Cappitech with a journalist background, one of my goals with the Cappitech Blog is to simplify Financial Regulation.

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