September 20, 2017 / 4:53 PM / in a month

FCA cuts firms some slack on EU reforms

LONDON (Reuters) - Britain’s financial watchdog will not take action against firms that have not complied fully with new European Union trading rules when they come into force in January, a top regulatory official said on Wednesday.

The Canary Wharf business district is seen reflected in windows at dusk in London, Britain December 11, 2016. REUTERS/Toby Melville

But companies will have to show they have taken sufficient steps to meet requirements under the EU’s Markets in Financial Instruments Directive, or MiFID II, Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority, said.

Steward’s comments may relieve firms struggling to implement the new rules, which were designed in the wake of the 2008-2009 financial crisis as a means of reforming financial markets and making trading fairer and safer for customers.

The European Commission has already delayed the implementation of MiFID II by a year to give firms and regulators more time to comply with it. But with the Jan. 3, 2018 deadline looming, many are still concerned they will not be ready on time.

“We will not take a strict liability approach especially given the size, complexity and magnitude of the changes that are required,” Steward said at a conference in London.

“This means we have no intention of taking enforcement action against firms for not meeting all requirements straight away where there is evidence they have taken sufficient steps to meet the new obligations by the start-date.”

He said the FCA’s “disposition is likely to be different” where firms have made no genuine attempt to be ready or that have deliberately flouted key obligations.

The wide-ranging MiFID II reforms will apply to securities markets, investment firms and intermediaries from January 2018.

Reporting by Emma Rumney. Editing by Jane Merriman

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