ICI Global Members
Equity Markets Advisory Committee
ICI Global Regulated Funds Committee
ICI Global Trading & Markets Committee
International Committee SUBJECTS: International/Global
MiFID, EMIR, AIFMD, UCITS V
Trading and Markets RE: ICI Global Letter on FCA CP 16/29 – Investment Research under MiFID II
On January 3, we filed the attached response to the UK Financial Conduct Authority’s (“FCA’s) third consultation on its proposed implementation of the Markets in Financial Instruments Directive II (CP16/29). The Consultation, which is available at https://www.fca.org.uk/sites/default/files/cp16-29.pdf, includes a section on inducements and research (Section 3).
In our response, we stress that it is critical that Member States, including the FCA, implement the investment research provisions in a manner that achieves the objectives of MiFID II, while providing a realistically workable framework for firms. We note that the FCA’s approach in addressing various operational and technical aspects of the requirements appears to be more prescriptive and inflexible than required under the Delegated Directive, and that the FCA has previously stated that it did not intend to gold plate these requirements. We therefore urge the FCA not to adopt a framework that would, in effect, eliminate the ability to firms to fund research payment accounts by collecting charges alongside transaction costs.
Considering the challenges with applying these rules to non-equity classes of assets, the response requests that the FCA’s supervision of firms reflect these difficulties. The response also requests the FCA to confirm formally its position on, or interpretation of, various technical aspects of the operation of the research payment account, budgeting, and the client agreement. In addition, it expresses disagreement with the FCA’s proposal to include within scope the managers of collective investment schemes.
Eva M. Mykolenko
Associate Chief Counsel - Securities Regulation