In its second consultation paper on Mifid II published on July 29, which put position limits and reporting for commodity derivatives among key areas under the spotlight, the FCA made clear that European regulation is still a top priority in the wake of the vote.
Andrew Bailey, who swapped his Threadneedle Street post at the helm of Bank of England’s Prudential Regulation Authority to become chief executive of the FCA in July, reiterated that Mifid II, like other laws derived from Europe, remains a priority.
“As we said in our statement following the EU referendum, firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect,” Bailey said in a statement.
Mifid II, which is set to come into force in January 2018 following a May decision by European lawmakers to formally delay its implementation by a year, promises a sweeping overhaul of trading rules across Europe.
Bailey said Mifid II “reflects recent themes of UK conduct regulation”, such as improving controls on creating and selling financial products. It will also implement commitments made by the UK after the financial crisis to reform derivatives markets by making them less risky and more transparent.
As firms and regulators continue with implementation plans, the FCA said it had developed the policy in its consultation paper in the context of the existing UK and EU regulatory framework.
“We will keep the proposals under review to assess whether any amendments will be required due to changes in the UK regulatory framework, including as a result of any negotiations following the UK’s vote to leave the EU,” it added.
Over the coming years, Brexit negotiations will pit the EU’s Michel Barnier, who can rely on years of experience implementing financial regulation across Europe, against the UK’s David Davis, a Conservative politician who backed Brexit.
The second consultation comes just over seven months after the FCA’s first paper, which included clarifications on the regulator’s stance on Mifid II.
Having hoped to publish a policy statement on the first consultation paper at some stage in the first half of 2016, the FCA said it was now likely that a single policy statement covering all aspects of implementation would be published in 2017.
Given the one-year delay to the implementation of Mifid II, the FCA said it was now working to the “revised” timetable. Its next consultation paper, which will focus on changes to its conduct of business sourcebook, is due later this year.