The Markets in Financial Instruments Directive (MiFID) II applies from 3 January 2018, and will deliver some important changes to the scope of regulation in the UK.
The deadlines for the submission of complete authorisation and passporting applications are:
- investments firms applying for authorisation or a variation of permission: 3 July 2017 (This is the final deadline for submitting a complete application, the majority of applications we receive are incomplete so we encourage firms to apply well in advance to increase the chance of obtaining the relevant permissions by 3 January 2018.)
- data reporting services providers (DRSPs) applying for authorisation: 3 July 2017 (with the exception of a non-equity CTP where firms should apply for authorisation by March 2019)
- cross-border service passport notifications: 2 December 2017, this deadline will help us assess applications and notifications and/or send them to relevant regulators in the European Economic Area (EEA) before MiFID takes effect on 3 January 2018.
- establishment passport notifications: as early as possible after the passporting gateway opens on 31 July 2017
Ensuring readiness for MiFID II implementation
In advance of when the MiFID II regime comes into effect on 3 January 2018, firms must ensure they have the correct permissions in place to carry out the relevant regulated activities from that date.
Since 30 January 2017, firms have been able to submit draft authorisation and variations of permission applications. On 1 April 2017, the domestic legislation relating to FSMA applications came into force and from 3 April onwards we are able to accept formal applications from firms.
For firms applying to be data reporting services providers, the legislative changes will come into force later. In the meantime, those firms can submit applications, which will be treated as draft until the legislation comes into force.
MiFID II: application and notification user guide
We have published this user guide to help firms decide which applications and notifications they should make and how to make them.
We have included links to the relevant forms in the guide.
Update to notifications obligation for firms
Since publishing the user guide we have provided further updates regarding notifications.
Ancillary activity exemption
Under MiFID II, firms or individuals who trade in commodity derivatives may be able to use their authorisation exemption.
Find out more about the ancillary activity exemption
General Clearing Members
In paragraph 3.42 and Table 1 in the guide, it says that firms are required to notify us if they want to act as a general clearing member. MiFID II does not explicitly require this and so, after further consideration, we will not require firms to inform us if they act as a general clearing member.
Authorisations and notifications
MiFID II introduces new processes for authorising investment firms and will require investment firms and others to make a range of notifications.
It will have a significant impact for a range of authorised persons, recognised investment exchanges, and some businesses that currently do not have to be authorised. It also means that some other firms have to apply for authorisation, variations of permission or make notifications to us in a specific way.
In particular, MiFID II introduces a new investment service for firms operating an organised trading facility (OTF) and the new financial instrument of emission allowances. It also introduces changes to the scope of existing investment services and financial instruments, and narrows the scope of exemptions currently provided under MiFID.
MiFID II also requires entities that carry out the following data reporting services to be authorised:
- operating an approved publication arrangement (APA)
- operating a consolidated tape provider (CTP)
- operating an approved reporting mechanism (ARM)
In addition, HM Treasury is creating a new investment type of structured deposits for specific regulated activities and is including certain types of binary options in the investment type of contract of difference.