HM Treasury has announced further legislative changes to the Markets in Financial Instruments Directive (MiFID) framework, continuing efforts to modernise the UK’s financial markets. The reforms are designed to simplify rules, enhance oversight, and strengthen the UK’s position as a global financial hub.
The UK government plans to give the Financial Conduct Authority (FCA) expanded powers over the reporting of over-the-counter (OTC) commodity derivatives positions. The decision follows lessons from the 2022 Nickel market disruption, where market instability raised concerns about gaps in oversight. The changes will ensure exchanges receive appropriate data on OTC positions relative to their risk level, helping the FCA and exchanges manage market risks more effectively without unnecessary compliance burdens for firms.
Changes to transaction reporting
HM Treasury will also revoke certain transaction reporting requirements under the Markets in Financial Instruments Regulation (MiFIR) and transfer responsibility for creating a new reporting regime to the FCA. The aim is to streamline the process, addressing inefficiencies highlighted in the Wholesale Markets Review. This move is expected to cut costs for businesses while maintaining necessary regulatory oversight.
Another key step involves removing firm-facing rules from MiFID’s Organisational Regulation and placing them under the FCA’s handbook. According to HM Treasury, this shift ensures that regulations are based on real-world supervisory expertise and allows for quicker updates in response to changing market conditions.
Coordinated implementation
The Treasury will work closely with the FCA and Prudential Regulation Authority (PRA) to ensure the changes are implemented smoothly. Efforts will focus on coordinating the timing of rule changes to minimise disruptions for businesses.
These reforms follow earlier changes implemented under the Financial Services and Markets Act (FSMA) 2023, which removed measures like the Double Volume Cap and Share Trading Obligation. Together, they form part of a broader effort to update the UK’s financial regulatory framework in a post-Brexit landscape.
