Published on 27 October 2016
MiFID II: Response to CP9/16 – PS29/16
This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses to Consultation Paper (CP) 9/16 ‘Implementation of MiFID II: Part 1’.
It sets out final rules to transpose the Markets in Financial Instruments Directive (MiFID II) legislative package for:
- the extension of scope and harmonisation of the MiFID passporting regime in the Passporting Part of the PRA Rulebook; and
- systems and controls for firms who undertake algorithmic trading and provide direct electronic access to trade venues in the new Algorithmic Trading Part of the PRA Rulebook.
This PS is relevant to banks, building societies, PRA-designated investment firms and their qualifying parent undertakings, which for this purpose comprise financial holding companies and mixed financial holding companies, as well as credit institutions, investment firms and financial institutions that are subsidiaries of these firms.
The policy contained in this PS has been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union (EU) take effect.
Feedback on consultation responses
Overall, the PRA does not consider that the responses received to the CP necessitate significant changes to its proposals. The PRA has, however, had regard to responses to the CP, and made amendments to the proposed rules where appropriate, including to add further clarity. The PRA sets out the most important issues raised by respondents and notes the main areas where the PRA has made amendments to the rules proposed in the CP in Chapter 2 of this PS.
Future EU directly applicable Regulatory Technical Standards (RTS)
The European Securities and Markets Authority (ESMA) has consulted on draft RTS and implementing technical standards relating to both passporting and algorithmic trading under MiFID II. The draft regulatory technical standards relevant to the rules in this policy statement have been adopted by the European Commission (EC).
Subject to there being no substantial change to the text of the standards published in the Official Journal of the European Union which would result in substantive changes to the rules, the PRA shall insert the instrument numbers and commence the rules in the appendices to this policy statement. This policy statement will be updated at that point with the finalised instruments. Where necessary, the PRA may also make further changes to the rules without further consultation to give effect to the text of the final standards adopted by the EC.
Published on 24 March 2016
Implementation of MiFID II: Part 1 – CP9/16
In this consultation paper (CP), the PRA sets out its proposals for rules to transpose the Markets in Financial Instruments Directive (MiFID II) legislative package, comprising the Directive, MiFID II (2014/65/EU), and the Markets in Financial Instruments Regulation (2014/600/EU) (MiFIR).
MiFID II is currently due to apply from 3 January 2017 and member states must transpose its provisions in national legislation and regulations by 3 July 2016, although the European Commission has now proposed to delay the application date (January 2018). HM Treasury consulted on changes required to UK legislation in March 2015 and the Financial Conduct Authority (FCA) consulted on some of the necessary changes to its Handbook in December 2015.
This CP is relevant to banks, building societies, PRA-designated investment firms and their qualifying parent undertakings, which for this purpose comprise financial holding companies and mixed financial holding companies, as well as credit institutions, investment firms and financial institutions that are subsidiaries of these firms.
Summary of proposals
The policy proposals included in this CP are:
i. the extension of scope and harmonisation of the passporting regime; and
ii. systems and controls for firms who undertake algorithmic trading and provide direct electronic access to trade venues.
The PRA intends to publish a further CP in due course to cover other areas of MiFID II for which PRA Rulebook amendments are required – see CP for more details.
This consultation closed on 27 May 2016.