FCA Proposes to Remove Obligations of RTS 27&28 Reporting

​The United Kingdom's Financial Conduct Authority (FCA) has published a consultation paper: Changes to UK MIFID's conduct and organisational requirements, in which the watchdog proposes exemptions to obligations of RTS 27 and RTS 28 reporting.

In particular, the FCA proposes to remove two sets of reporting obligations on firms. One is the obligation on execution venues to publish a report on a variety of execution quality metrics to enable market participants to compare execution quality at different venues (known as RTS 27 reports). The other is the obligation on investment firms who execute orders to produce an annual report setting out the top 5 venues used for executing client orders and a summary of the execution outcomes achieved (known as RTS 28 reports). 

Additionally, the UK regulatory body proposes to broaden the list of what are considered minor non-monetary benefits to include research on SMEs with a market cap below £200m and FICC research, so that it is not subject to the inducement rules. The regulator has also made rule changes on how inducement rules apply to openly available research and research provided by independent research providers.

The changes will affect investment firms and market operators in the UK, banks and Collective Investment Scheme operators providing investment services, persons providing investment advice and reception and transmission of orders who did not opt into MiFID, as well as persons providing research that the FCA do not authorise.

The proposals, which signal the UK watchdog's inclination to form a more refined regulatory framework, will be open for comments before 23 June 2021.