The FCA has updated its direction relating to the Derivatives Trading Obligation (DTO) with effect from the end of 2024. The DTO came from MiFID, and the FCA is now modifying the UK’s DTO from the transitional version previously in force using its new powers of direction under FSMA 2023. The direction applies to transactions in classes of derivatives subject to the DTO in both the UK and EU and will reflect changes following the LIBOR transition.
The purpose behind the new direction was to achieve an outcome equivalent to the transitional direction so as not to cause any disruption for market participants caught by a conflict of law between the EU and UK DTOs.