CP23/14: Quarterly Consultation Paper No. 40

The Financial Conduct Authority, FCA, has launched a new quarterly consultation (CP23/14) in relation to miscellaneous amendments to the FCA Handbook and modifications pertaining to a delegated regulation under the Retained Markets in Financial Instruments Regulation (UK MiFIR). Specifically, the FCA proposes to
(1) modify the MIFIDPRU prudential sourcebook applicable to MIFIDPRU investment firms, including collective portfolio management investment (CPMI) firms (AIFMs and UCITS), to
– clarify how firms shall calculate the own funds threshold requirement (OFTR) under MIFIDPRU 7.6: a firm’s OFTR „can be no lower than the total resources requirement under any other prudential regime that applies to it if it is higher than the firm’s own funds requirement under MIFIDPRU“;
– clarify how firms have to determine their liquid assets threshold requirements (LATR) under MIFIDPRU 7.7.5G;
– clarify when the group internal capital adequacy and risk assessment (ICARA) process is to be applied on a consolidated and individual firm basis and provide examples in this context (MIFIDPRU 7.9);
– modify the MIF007 – ICARA Questionnaire to remove duplicate questions and simplify the questionnaire altogether; and
– make other technical amendments (renumbering of provisions) within the sourcebook to align the numbers with those set out in the questionnaire.
(2) modify the SUP manual to clarify that the figures in the reporting form FIN067 (report on the financial status of a CPMI) in SUP 16 Annex 25G are to be reported in 000s.
(3) modify Retained Commission Delegated Regulation (EU) 2017/587 to establish a deferral regime for the reporting and disclosure of transactions regarding ETFs priced at NAV to no longer require such reporting (disclosure) until the final NAV has been determined and the transaction can be adequately valued. Currently, the regulation requires the reporting of such trades as soon as possible following execution unless a deferral applies (60 minutes for trades above €10 million and until the end of the day for trades above €50 million).
(4) modify the Conduct of Business sourcebook (COBS) to clarify which incentives on financial promotions of high risk investments are permitted and which are not. Thereafter, the FCA proposes to maintain its total ban on incentives offered to retail clients, but would exempt those incentives that are only offered for the purpose of switching high risk investment holdings from one service provider to another. Also, the FCA proposes to set out a list of „benefits“ that may be interpreted as „incentives“ for the purposes of the ban and may subsequently not be offered to retail clients.