FCA issues statements on distributed ledger technology

The FCA published a feedback statement in December 2017 regarding its April 2017 discussion paper on distributed ledger technology (DLT), or blockchain.

DLT has been used, in the digital currency Bitcoin for example, to facilitate peer-to-peer payments without a central third party.

Its use has been expanded to the sharing of data amongst multiple network participants, whether or not involving digital currencies, and in the issuance, trading and clearing of financial instruments. It can also be used to keep and share records and to facilitate regulatory reporting and transaction monitoring.

In its feedback statement, the FCA said it was encouraged by the positive feedback received and will continue to monitor DLT-related market developments and keep its rules and guidance under review in light of developments. Following its consumer warning on initial coin offerings (ICOs) issued in September 2017, the FCA will conduct a deeper examination of the market to determine whether there is a need for further regulatory action. The FCA said that its regulatory philosophy is to be ‘technology-neutral’.

No changes to the FCA Handbook are currently proposed with regard to DLT.

Read the feedback statement.

Read the September 2017 consumer warning on initial coin offerings.

FCA updates certain forms and guidance for MiFID II

On the implementation of MiFID II on 3 January 2018, the FCA substantially updated a number of its forms for regulatory transactions and initial authorisations.

These include new forms for changes in control of MiFID firms, which add a number of new questions.

See the FCA’s change in control webpages.

The FCA has also published general guidance on the authorisation process, forms and prudential categorisations for first time applicants and existing investment firms seeking to vary their scope of permissions.

See the FCA’s MiFID II general guidance.

FCA issues 'Dear CEO' letter in relation to retail investment in contracts for differences

The FCA issued a ‘Dear CEO’ letter in January 2018 to firms that provide or distribute contracts for difference (CFD) products to retail customers on an advisory or discretionary basis to ensure they understand their obligations. This letter follows the conclusion of a project to assess whether CFD providers and distributors deliver the CFD product to the intended target market, pay due regard to the interests of customers and treat them fairly.

The FCA expects CFD providers and distributors to consider the issues raised and take action to ensure compliance if any areas of concern are identified.

Read the FCA's letter in full.

The FCA’s letter ties in with ESMA’s 18 January 2018 Call for Evidence on temporary product intervention measures applicable to CFDs and binary options sold to retail clients.

Read ESMA’s Call for Evidence.