FCA MiFID II Roundtable Notes Delays in Consultation Timetable

The FCA published minutes of its MiFID II implementation roundtable meeting of 14 September 2015 on 25 September 2015. These included the following points of note:

• It is unlikely that the delegated acts required by MiFID II and the Markets in Financial Instruments Regulation (MiFIR) will be adopted by the European Commission before the beginning of November 2015 at the earliest. 

• The Financial Advice Market Review (FAMR) announced by HM Treasury in August 2015 is due to report in early 2016, and is likely to touch on issues that are relevant to aspects of MiFID II. 

• However, firms cannot assume that these delays will lead to any postponement of the July 2016 transposition deadline or the January 2017 date of application.

• Due to the lack of certainty regarding the EU legislative timetable, the FCA's planned December 2015 consultation on MiFID II Handbook changes may be delayed. The FCA is considering issuing one consultation paper in December 2015 on issues where there is certainty, and a second paper consulting on the remaining issues in early 2016.

FCA Consults on UCITS V Implementation and Related Handbook Changes

The FCA published its consultation paper CP15/27 on the Implementation of the UCITS V Directive and other changes to the Handbook affecting investment funds on 3 September 2015. The proposals include:

• A Remuneration Code for UCITS management companies in a new Chapter 19E of the FCA’s Senior Management Systems and Controls Sourcebook (SYSC 19E), to be broadly similar to the AIFMD Remuneration Code in SYSC 19B. The deadline for comments is 9 November. 

• FCA authorisation and supervision fees for European Long Term Investment Funds (ELTIFs), and a redress model to bring such funds and their managers within scope of the Financial Ombudsman Service and the Financial Services Compensation Scheme. The ELTIF Regulation applies from 9 December 2015. The deadline for comments on this part is 5 October 2015.

• Other changes to ensure the rules and guidance for authorised investment funds are up-to-date, including:

  • A standard reporting template for UCITS management companies to reporting their use of derivatives;  

  • a revised definition of feeder funds and rules allowing authorised funds to invest in them; and 

  • new rules allowing authorised fund managers to cease temporarily accepting new subscriptions to protect existing investors.

The deadline for comments on these changes is 7 December 2015.

Hedge Fund Standards Board Issues Cyber-Security Memo

The Hedge Fund Standards Board (HFSB) published a memo on cyber-security for hedge fund managers on 17 September 2015. The memo includes:

• An overview of existing high level cyber-risk management tools, guidance and certification standards that hedge fund managers can use to develop a tailored approach to cyber-security.
• A framework to identify a firm's key digital assets, including client data, proprietary algorithms or strategies, trading book and ongoing ability to execute trades.
• A list of action items.
• An overview of projects that can be undertaken to improve a firm's resilience, including the development of an incident response plan.
• Information on financial services regulators' requirements, guidance and approaches in relation to cyber-security.
• A set of recommendations to help firms develop their own cyber-security strategy.