The Financial Conduct Authority (FCA) has recently released a pivotal Consultation Paper, CP24/24: The MiFID Organisational Regulation. This Paper outlines the FCA’s proposal to incorporate the firm-facing requirements of the MiFID Org Regulation (Commission Delegated Regulation (EU) 2017/565) into the FCA Handbook, with the primary objective to ensure continuity for firms by maintaining the current substance of these requirements.
Key Proposals in CP24/24:
In addition to bringing the MiFID Organisational Regulation firm-facing obligations into the FCA Handbook, CP24/24 outlines key proposals designed to improve regulatory transparency and facilitate a smooth transition for firms operating within the UK’s financial markets.
- Focus on Market Integrity: Retain and potentially refine the MiFID Org Reg’s key rules for market integrity and investor protection, to better suit the range of UK authorised firms and their clients.
- Extending Requirements to Non-MiFID Firms: Apply key regulatory provisions to non-MiFID firms, such as Article 3 firms, to ensure uniform standards and to protect investors.
- 3 Future Amendments: Discussion on further reforms to make the rules more effective, particularly in areas where the Consumer Duty does not apply, ensuring that the regulatory framework evolves with the market’s needs, including potential changes to the client categorisation “opt up” process.
- Stakeholder Engagement: The FCA is actively seeking feedback from stakeholders, with consultations open until 28th February 2025 for most Chapters, and until 28th March 2025, for Chapter 4.
Why This Matters
For MiFID investment firms, understanding and adapting to these regulatory changes is essential. The proposed amendments aim to simplify compliance processes, reduce regulatory burdens and enhance the overall efficiency of the financial market. Staying informed and actively participating allows firms to manage these changes effectively and remain competitive in a shifting regulatory landscape.
For non MiFD firms, the rules are drafted in a complex manner that is often difficult to follow. The proposals for future reform aim to rationalise and improve the drafting and improve clarity.
What Firms should do Next
Firms operating within the UK’s financial markets should:
- Review the CP24/24: Understand the proposed changes and assess their potential impact on operations.
- Engage in the Consultation Process: Provide feedback to the FCA by the specified deadlines to ensure their perspectives are considered.
- Prepare for Transition: Develop strategies to adapt to the incorporation of these requirements into the FCA Handbook, ensuring ongoing compliance.
How Complyport can help
We provide expert support to help firms navigate evolving financial regulations, ensuring compliance with MiFID, MiFIR and other key frameworks. Our services include:
- Regulatory Alignment: Guiding firms in aligning their operations with MiFID services, ensuring compliance with UK financial regulations.
- Horizon scanning: Enabling firms to plan more effectively for future regulatory developments.
- Transaction Reporting: Providing comprehensive trade and transaction reporting solutions, including advisory support for EMIR, MiFIR and SFTR reporting requirements.
- Prudential and Regulatory Reporting: Assisting with regulatory returns and prudential disclosures, including MIFIDPRU 8 disclosures, to enhance transparency and meet regulatory expectations.
- Operational Resilience: Offering services related to operational resilience, including IT and cybersecurity audits, to ensure firms meet the FCA’s operational resilience policies.
- Consumer Duty Health Check: Helping firms assess and enhance their compliance with the latest regulatory standards, ensuring alignment with the FCA’s expectations.
- Compliance Support: Delivering ongoing compliance support, governance, risk and compliance services to help firms maintain adherence to regulatory standards.
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