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.