Quarterly Consultation Paper: Updates to High-Risk Investments, MIFIDPRU and ETF Valuation
This edition of the Quarterly Consultation paper covers a number of clarification points within the FCA’s Handbook. The FCA clarified the MIFIDPRU calculation of regulatory capital, including making clearer expectations on firms applying the Group Capital Test, the calculation of OFTR and liquid asset threshold requirements.
For ETFs that are priced at (or against Net-Asset-Value), the FCA is proposing to reduce the operational burden for firms, by allowing for the transaction report to be deferred until after the publication of the ETF’s NAV. Currently Firms are required to submit 3 trade reports, namely a post trade flag, a cancellation flag and then an amendment for the final price when the NAV is published. The proposed changes are intended to simplify the reporting cycle with firms able to defer the report of the trade until the NAV is available.
The Final amendment is with respect to the ban on offering incentives to invest in high-risk investments for retail customers. In February 2023, new rules came into force which banned firms from offering incentives to retail customers for certain types of riskier investments. Within the Consultation Paper, the FCA is proposing to amend the wording of the relevant ruleset to ensure that all incentives are captured within the scope even when there is no requirement to invest to gain the benefit. This applies regardless of the rationale for offering the incentive, which consumer the incentive is aimed at, or whether it might be incentivising actions such as registration or signups.
Any responses to the consultation paper should be made by the 10th July 2023.
