The aim of this outlook is to provide busy senior managers and compliance professionals at brokers and trading firms with an overview of key regulatory milestones in 2022.
Key milestones – UK
|To do list
|Items following the implementation of the Investment Firms Prudential Regime (“IFPR”)
|1st February 2022
(AT1 notification deadline)
(Internal capital adequacy and risk assessment (“ICARA”) review)
|Inform FCA of intended treatment of instruments treated as additional tier 1 (“AT1”) under the UK CRR.
Review ICARA process in preparation for submitting first MIF007 report in early 2023.
Be prepared for interactions with the FCA on Remuneration Policy elements, particularly Policy Statements and the identification of material risk takers (“MRTs”).
|Changes to UK EMIR trade reporting requirements
|Consultation CP21/31 closes 17th February 2022
|Consider how to source data for additional fields that are relevant to firm’s operations (89 proposed).
Consider impact of amendments to existing fields.
Review policies and procedures to accommodate the:
|Review of the appointed representative (“AR”) regime and publication of final rules.
|Consultation CP 21/34 closes 3rd March 2022
Publication of final rules during H1 20211
|If your firm supports ARs, get ready to provide additional information on existing ARs’ business models within 60 days of final rules entering into force.
Revise AR supervision procedures / monitoring programme to:
|Implementation of rules and guidance concerning operational resilience.
|31st March 2022
|Identify important business services.
Set impact tolerances for maximum tolerable disruption.
Identify vulnerabilities in operational resilience.
|Conduct of information gathering exercise by the FCA into the sale of trading data: “we will undertake a significant programme of work over the next year and beyond to understand, and, where appropriate, address the potential harms we have identified” (FCA Feedback Statement 22/1).
|It is likely that trading venues and data vendors will be the primary recipients for information requests from the FCA. However, it is possible that investment firms could be contacted for examples of pricing structures and terms and conditions for onward distribution. Accordingly, it might be worth checking this is in order in anticipation of a possible request.
|Introduction of new Consumer Duty (“CD”)
|Closing date for comments on CP21/36: 15th February 2022
Publication of final rules by 31st July 2022
|If your firm is involved in the provision of financial services to consumers, start to consider:
|Publication of new rules on the marketing of cryptoassets and high-risk investments
|Closing date for comments on CP22/2: 23rd March 2022
Final rules to be published in summer 2022
|If relevant, determine whether the firm is offering any products that would be classed as ‘qualifying cryptoassets’ pursuant to the new rules.
Conduct a review of current promotional activity. Make an assessment as to the likely impact of the new rules.
Train employees and third parties involved in promoting cryptoassets on the firm’s behalf.
|Implementation of phase 6 of the bi-lateral margin requirements.
|1st September 2022
|Calculate average aggregate notional amount of uncleared OTC derivatives as at last business day in March, April and May.
Review your counterparties. Determine if they are also in-scope of the requirements.
Work out how much collateral you will probably need to post.
Review your collateral management processes, particularly in view of the calculation methodology to be used and permitted collateral types.
Ensure custody arrangements with service providers are in place and have been tested.
Check all requisite legal documentation is in place. If an entity is significantly impacted by Phase 6 then it would be prudent to have your documentation arrangements reviewed by outside counsel.
|Publication of outcomes from HM Treasury’s Wholesale Markets Review.
|To be confirmed
|Consider impact of outcomes on firm’s operations.
Key milestones – Europe
|To do list
|ESMA monitoring of developments in relation to retail trading activities. Possible mystery shopping. Further work on crypto assets.
Possible new guidance on the issuance of investment recommendations via social media channels.
|Publication of strategy for retail investments in Europe, with amendments to legislation to be tabled by the European Commission by mid-2022
|If your firm’s group is involved in the provision of online trading services to retail clients based in the EEA, get ready for potential contact from national competent authorities (“NCAs”) on:
|Expiration of UK central counterparty (“CCP”) equivalence decision
|30th June 2022
|If firm holds positions at UK CCPs model possible impact if equivalence decision is not renewed.
|Expiration of temporary regulations for UK firms to provide investment services to eligible counterparties and per se professional clients in Norway.
|31st December 2022
|Examine client base to identify any Norwegian eligible counterparties and per se professional clients.
Prepare to enable continuity of service post expiry of temporary regulations. Communicate plan to affected clients as soon as practicably possible.
|Issuance of new guidance on “pre-hedging” pursuant to the Market Abuse Regulation (“MAR”).
|To be confirmed
|If firm is involved in principal trading activities, train relevant front office staff when guidance has been issued.
|Continued review of the second Markets in Financial Instruments Directive (“MiFID”) II by ESMA, particularly:
|To be confirmed
|If your firm’s group has broking operations in the European Economic Area (“EEA”), consider if:
2022 promises to be another intense year for brokerages and trading firms in the UK and Europe. However, with careful planning it should be possible to avoid major operational upheaval.
Originally published by Thomson Reuters © Thomson Reuters