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Published date: 27 November 2024

UK Financial Conduct Authority Consults on the MiFID Organisational Regulation

The Financial Conduct Authority has published a consultation paper on the Markets in Financial Instruments Directive Organisational Regulation (MiFID Org Reg). The FCA is consulting on proposals to transfer the firm-facing requirements of the MiFID Org Reg into FCA Handbook rules when HM Treasury commences the repeal of the MiFID Org Reg. The FCA is proposing to retain the current substance of the requirements to provide continuity for firms. Provisions that the FCA is not replacing in regulatory rules will either be restated or repealed by HM Treasury to coincide with the Handbook rules coming into force, and HM Treasury will publish a draft statutory instrument setting out how the Government will deal with the non-firm-facing elements.

The consultation paper also includes a discussion chapter about further reform, either now or in the future, to make the rules better suited to the range of U.K. licensed firms and their clients. This includes in circumstances where the Consumer Duty does not apply. It considers how the FCA could rationalize or improve MiFID II derived conduct and organizational rules, including for Article 3 firms. The FCA also discusses whether and how the client categorization rules could work more effectively.

Responses to the consultation may be submitted until February 28, 2025, except for responses to the discussion on further reform, for which responses may be submitted until March 25, 2025. The publication of the policy statement and final rules will be in line with the U.K. government's timetable to repeal the legislation. The Prudential Regulation Authority published a connected statement, confirming that it plans to publish its equivalent consultation paper on replacing relevant firm-facing provisions in the MiFID Org Reg in PRA rules in Q1 2025. The PRA states that it aims to publish a policy statement on the same day as the FCA in H2 2025.