Schedule 10: Amendments of the Markets in Financial Instruments Regulation
- This Schedule amends the mechanism under which the UK may assess third countries to be equivalent for the purposes of Article 47(1) of MiFIR.
- Paragraph 2 of Schedule 10 specifies that Chapter 1 of Title 7 of MiFIR (supervisory measures relating to interventions) applies to third country firms providing investment services or performing investment activities in the UK.
- Paragraph 3 is self-explanatory.
- Paragraph 4 is self-explanatory.
- Paragraph 5 makes amendments to Article 46 of MiFIR, including a change to the registration criteria for third country firms, to include a requirement that firms seeking registration have established the necessary arrangements and procedures to provide the information specified by the FCA under the FCA’s new rule-making power in Article 46, paragraph 6B.
- Paragraph 6 amends Article 47 of MiFIR. It sets out the assessment criteria in relation to an equivalence determination, as well as the coordination and monitoring requirements of the FCA in relation to third countries which are subject to an equivalence determination.
- Paragraph 7 enables HM Treasury to impose specific requirements on firms that have registered under the Title 8 Regime.
- Paragraph 8 amends Article 49 of MiFIR (withdrawal of registration). Paragraph 8, sub-paragraphs (1) and (2) are self-explanatory. Sub-paragraph (3) sets out the circumstances in which the FCA may place temporary restrictions on a third country firm providing investment services in the UK.
- Paragraph 8, sub-paragraph (4) sets out the circumstances in which the FCA may withdraw the registration of a third country firm.
- Paragraph 8, sub-paragraph (5) provides that upon the FCA taking action to withdraw registration, it must take account of the seriousness of the risk posed to investors and orderly functioning of markets. It also specifies the considerations the FCA must have regard to when deciding appropriate action.
- Paragraph 9 details the procedure for temporary prohibitions and restrictions, as well as for the withdrawal of registration of a third country firm. It also enables HMT to specify the timings and content of the FCA’s written notice to the firm and the avenues available to the third country firm in response.
- Paragraphs 10 – 13 concern FCA directions and rules. Paragraphs 10 and 11 are self-explanatory. Paragraph 12 specifies that the FCA can make different provisions under Articles 46(4) and (5) in relation to different applications and cases (noting that these specific provisions relate to applications made by third country firms to register with the FCA and information such firms are required to provide to clients, respectively). It also sets out the procedural rules that apply to the FCA’s exercise of its rule-making power under Article 46(6B) (i.e. to specify reporting requirements for third country firms that register under the regime) or Article 48A (i.e. regarding specific requirements). Paragraph 13 ensures that FCA consultation requirements, as specified in section 138I of FSMA, may be satisfied by actions taken both before and after paragraph 12 comes into force.
