Update to MiFID II 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, emission allowances and derivatives on emission allowances may be able to use their authorisation exemption.

Find out more about the ancillary activity exemption

Supervised Investment Firms

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 we will not require firms to inform us if they act as a general clearing member.

Systematic Internalisers

Firms must monitor their trading levels and calculate whether their activities bring them into the systematic internaliser (SI) regime in the various instruments they trade. Firms brought into the SI regime must comply with the relevant notification requirements. In particular, firms must notify us both when they become a SI and when they cease to be a SI in a particular instrument(s).

A firm needs to notify us when it starts its activity as an SI in a class of financial instrument. When a firm already acting as an SI notifies us that it is either adding or removing a class of financial instrument, the information it provides should reflect the firm’s ongoing SI activity after allowing for the change. For example, if a firm which had previously notified us about its shares and exchange-traded funds (ETFs) activities, ceases to act as an SI in ETFs, it should notify us of the change by confirming it is acting as an SI in shares only. A firm should only notify that it is ceasing to act as an SI if it is discontinuing activity in all the classes of financial instrument it has previously notified us about.

Firms can also opt-in by notifying us that they will operate an SI in specified financial instruments, as long as they do not exceed the pre-defined thresholds. As above, if a firm that opts into the regime ceases to be an SI, it must notify us. Firms that will operate an SI from 3 January 2018 can submit a notification to us in advance.

Firms can access the ‘Systematic Internaliser Notification’ form via our Connect portal. Existing Connect users may need to amend their profiles to get access to the form. Please refer to the user guide for further information on this and the SI notification submission process.

For any specific questions about the SI requirements, please email [email protected]. For any questions on how to submit the notification via Connect, please call the FCA Contact Centre on 0300 500 0597.

The SI regime and associated obligations apply at the level of each single financial instrument. So we expect all firms submitting a notification to establish and maintain a list of all financial instruments for which it is acting as an SI. We may request access to these lists as part of our regulatory functions.

DEA Providers & Algorithmic Trading 

Authorised firms, and certain firms exempt from MiFID II, must notify us if they are providing direct electronic access (DEA) or undertaking algorithmic trading (as defined in Article 4 of MIFID II and further specified by the MiFID II Delegated Regulation (EU) 2017/565). They must notify us where the UK is their home Member State and where a non-UK firm is a member or participant of a UK trading venue.

Firms who intend to carry out one or more of these activities from 3 January 2018 may submit a notification to us in advance.

Investment firms needs to send us notification when they commence activity as a DEA provider and/or undertakes algorithmic trading and, thereafter, when it ceases any of these activities. When a firm, already acting in one or more activities, notifies us of a change, the information it provides in this form should reflect its remaining activities after allowing for the change. For example, if a firm which had previously notified us of its activity as a DEA provider and algorithmic trading ceased to act as a DEA provider, it should notify the change by confirming it is undertaking algorithmic trading only.

Firms can access the ‘Electronic Trading Notification’ form via our Connect portal. Existing Connect users for authorised firms may need to amend their profiles to get access to the form. Non authorised firms will need to register onto the Connect portal. Please refer to the user guide for further information on this and the DEA Providers and Algorithmic Trading notification submission process.

For any questions on how to submit the notification via Connect, please call the FCA Contact Centre on 0300 500 0597.

Trading Venue Notifications (RMs, MTFs, OTFs)

MiFID II extends the number and type of Notifications that existing (RM/MTF) and new (OTF) venues are obliged to submit to the FCA from 3 January 2018. We expand on the FCA’s Application and Notification Guide published on 13 January 2017, explaining what we need the venues to notify, why we need the information specified, how we expect to receive it and when we should be notified. Find out more.