FCA has held its MiFID 2 conference, and published two speeches from it. David Lawton, Director of Markets, Policy and International emphasised that:
- everyone is still working towards MiFID 2 implementation on 3 January 2017. However, there are already delays and uncertainties. The Commission has not yet published the delegated acts expected over the summer. It is not known whether any European legislator is likely to object to the technical or regulatory standards, which could slow down the timetable. The UK is committed to getting legislation in place by the deadline of 3 July 2016, but much of its consultation on changes to law and rules is dependent on at least a near-final text of EU measures. He stressed FCA has no reason to believe there will be significant objections, but there is still room for uncertainty. He highlighted the areas in which ESMA’s technical standards differ significantly from its consultation draft;
- MiFID 2 is important legislation with the potential to change markets significantly for the better. Firms must appreciate the spirit and intent of the legislation and not just the letter; this relies on the reading, understanding and application of the requirements;
- MiFID 2 involves large-scale change, so firms should already be preparing for January 2017, based on the best knowledge available; and
- FCA will be ready and able to help users via its Supervisors and Contact Centre staff once the legislation is finalised.
David Geale, Director of Policy, highlighted key areas of MiFID 2 for the retail market and touched upon the practical steps and preparations firms need to plan for, including:
- application of Retail Distribution Review (RDR)-style rules on inducements to portfolio managers;
- changes to the rules on research;
- the shift from domestic guidance to tough new requirements on product governance;
- tougher requirements on communications with customers, suitability and appropriateness and conduct generally; and
- the introduction of new requirements governing frontline staff remuneration.