COVID-19: FCA extends Flexibility on RTS 27 Reports and 10 Percent Depreciation Notifications
On March 19, the Financial Conduct Authority (FCA) published a statement announcing that it is establishing temporary measures on RTS 27 reports on execution quality. Commission Delegated Regulation (EU) 2017/575 contains regulatory technical standards (RTS) specifying the content, format and periodicity of the data published by execution venues on the quality of execution of transactions. The FCA refers to these RTS as RTS 27.
The next set of these reports will be based on pre-Brexit data, so the information is likely to be of limited use for market participants and may be misleading. The FCA is preparing a consultation on the RTS 27 reporting obligation, with a view to abolishing it, due to concerns about the value of these reports and the burden of producing them. On this basis, the FCA will not take action against firms who do not produce RTS 27 reports for the rest of 2021. It expects to have concluded its policy consideration for the future of these reports by the end of 2021.
The FCA also announced a further extension to a temporary COVID-19 measure applying supervisory flexibility over 10 percent depreciation notifications. The temporary measure will be extended until the end of 2021, while the FCA consults later this spring on changes to the notification requirement. The requirements apply to firms that provide portfolio management services or hold retail client accounts that include positions in leveraged financial instruments or contingent liability transactions.
The FCA informed firms in September 2020 that it would apply supervisory flexibility over 10 percent depreciation notifications until the end of March 2021.