December 9, 2019

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FCA Supports SEC “No Action” Extension for MiFID II

On November 4, the US Securities and Exchange Commission extended their October 26, 2017 “no-action” letter in relation to the research provisions in the Markets in Financial Instruments Directive II (MiFID II), so that it expires on July 3, 2023 rather than on July 3, 2020.

On November 8, the UK Financial Conduct Authority (FCA) published a statement in support of this extension.

The MiFID II research unbundling requirements mean that broker-dealers can only receive payments for research in hard cash or through research accounts. However, in the US, it is only possible to receive hard cash for research if the broker-dealer registers as an investment advisor. This “no-action” letter means that US-based broker-dealers can comply with MiFID II research unbundling requirements without facing enforcement action from the SEC for being an unregistered investment advisor.

In the same statement, the FCA reiterated its intention to conduct further work in 2020/21 to assess compliance with the new rules. (For more information, please see the September 27 edition of Corporate and Financial Weekly Digest).

The SEC statement is available here.

The FCA statement is available here.

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John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
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Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
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Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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