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FCA Proposes Changes to MAR and SFTR

Written by Charlie Gearon

FCA Proposes Changes to MAR and SFTR

The Financial Conduct Authority (FCA) has today announced that they are proposing changes to a number of regulatory standards, including reporting on securities financial transactions (SFTR) and market abuse (MAR) among others.

The changes have been outlined in a consultation paper - Quarterly Consultation Paper No. 34. The paper also states that a consultation period has been instigated, during which financial firms will be able to respond with feedback about the proposed changes. The deadline for providing feedback to the FCA is January 10th 2022 for all changes other than those proposed for SFTR. The deadline for responding to SFTR changes is 1 week later on January 17th 2022.


Changes to MAR

The proposed MAR changes relate to Data Reporting Services Providers (DRSPs). DRSPs exist in the following 3 types:

  • Approved Reporting Mechanisms (ARMs): provide the service of reporting transaction details to competent authorities on behalf of investment firms;
  • Approved Publication Arrangements (APAs): provide the service of publishing post trade reports on behalf of investment firms; and
  • Consolidated Tape Providers (CTPs): collect trade reports for financial instruments from trading venues and APAs. They consolidate the trade reports into a continuous electronic live data stream, providing price and volume data per financial instrument.

The proposed changes relate to how DRSP’s should ‘wind-down’ or (cancel or reduce its data reporting services. The proposed change would require DRSPs to follow a strict wind-down plan ‘which promotes and protects the integrity of financial markets and the interest of the DRSP’s clients. The proposed changes would also hold DRSPs to stricter obligations during until the conclusion of the wind-down process.


Changes to SFTR

The proposed changes to SFTR aim to simplify and reduce reporting obligations by ensuring that firms only have to report SFTs under a single regime - UK SFTR.

Previously, a number of SFTs - namely those to which the counterparty is a member of the European System of Banks (ESCB) or the Bank of England - were also reportable under UK MiFIR, leading to duplicate reporting requirements.

This change would mean that SFTs where the counterparty is a member of the ESCB or the Bank of England would be exempt from reporting under UK MiFIR. This change, if approved, will be effective from March 31st, 2022.

This would mean that no SFTs would be subject to reporting under UK MiFIR - they would only be reportable under UK SFTR, even if a counterparty was a member of the ESCB or Bank of England.


Other Proposed Changes

Other proposed changes relate to

  • EU Exit Passport Regulations
  • SUP 8
  • EU withdrawal-related amendments to FCA forms.

For a full overview of proposed changes, see the FCA’s consultation paper here.