DP15/3: Developing our approach to implementing MiFID II conduct of business and organisational requirements

Published: 26/03/2015     Last Modified: 14/05/2015

We are launching a discussion on certain aspects of the revised Markets in Financial Instruments Directive (MiFID II) ahead of formal consultation later in 2015.

Why are we seeking views on this?

MiFID II is a wide-ranging piece of European legislation that will impact on wholesale markets and a wide range of financial services firms in the UK. We are seeking views from firms and other stakeholders on certain aspects of MiFID II where we have policy choices to make. These relate to MiFID II’s conduct of business and organisational requirements. Its provisions will take effect on 3 January 2017. We want to engage with firms and consumers as early as possible in the transposition process. So we are seeking views early from firms and other stakeholders on a range of implementation issues, to gather feedback and develop policy before we consult later this year.

As well as discussing topics where we have choices to make, we also highlight some important changes that MiFID II is likely to require of firms within its scope.

Discussion paper DP15/3 [PDF]

Who is this discussion paper aimed at?

This paper will be of interest to many different types of firm, including those undertaking MiFID business, as well as some firms whose activities are not within the scope of MiFID itself. It is particularly relevant to:

  • discretionary investment management firms
  • financial advisers
  • local authorities and firms who conduct business with local authorities
  • stockbrokers and others that provide personal recommendations to their clients on shares, bonds and/or derivatives
  • firms providing services in relation to insurance-based investments and pensions, and
  • firms currently exempt from MiFID under Article 3

What is the background to this?

The first Markets in Financial Instruments Directive (MiFID I), implemented in 2007, established the current regulatory framework for investment services and activities, covering markets in financial instruments very broadly.

MiFID II comprehensively amends and recasts MiFID I. MiFID II was published in the Official Journal of the European Union in June 2014, setting out new obligations and revised requirements for both retail and wholesale markets. Many of the new rules address risks in the wholesale market, such as controls on algorithmic trading, position limits in commodity derivatives markets and the regulation of data reporting services. MiFID also addresses conduct of business standards and organisational requirements, and it is the policy choices we need to make in these areas that we are exploring in this Discussion Paper.

What are the next steps?

We would welcome feedback from firms, industry and consumer groups, and other stakeholders on the questions in this discussion paper. We will consider your responses as we develop policy proposals ahead of consulting on the full set of Handbook changes later in the year.

We want to know what you think about the policy options set out in this paper, their impact on your business and on consumer outcomes. Please send us your comments by 26 May 2015 via the online response form, or by writing to us at the address on page 2 of the paper.   

We will consider feedback received and formally consult later in 2015 on rule changes, ahead of finalising rules in 2016. We will provide feedback from this paper, where relevant, in our consultation paper.

Want to find out more?

For more information see a timeline of MiFID II implementation and read our pages on MiFID II.

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