FSA has today published its promised July Consultation Paper (CP 06/14). It covers the following areas:

  • Client money and assets;
  • Markets - regulated markets/multilateral trading facilities, pre and post trade transparency for equities (including proposals for FSA-approved trade data monitors) and transaction reporting;
  • Scope of UK regulation, authorisation and passporting, registration of tied agents, enforcement, regulatory cooperation, prudential requirements and the capital/professional indemnity insurance requirements for exempt CAD firms.

One of the important areas in today's Consultation Paper is the changes to the Client Money Rules. FSA has published revised CASS 4 rules for non-MiFID client money and new CASS 7 rules for MiFID client money (which applies the FSMA statutory trust as part of UK implementation). MiFID firms holding money under CASS 7, can opt out of CASS 4 (and CASS 5) and into CASS 7 for their non-MiFID scope activities. One key issue is the absence in MiFID and draft CASS 7 of the current client money opt-out which is available for firms dealing with market counterparties and intermediate customers.

FSA is also warning firms to check the waivers they hold. FSA's current ability to grant waivers will be limited by MiFID and firms may therefore find that their waivers are not renewed/carried through to MiFID implementation after 1/11/07.

During the course of this week we will be sending you further Law-Now reports that analyse the issues raised in the Consultation Paper (which runs to 224 pages) and the draft amendments to the FSA Handbook (published in a separate Annex of Rule changes running to 293 pages).

This Consultation Paper follows FSA's CP06/9 (on systems and controls) and DP06/3 (Discussion paper on implementing MiFID's best execution requirements) in May and on the earlier HM Treasury paper on the legislative changes to implement MiFID (December 2005). The outcome of the HM Treasury paper (which was published before the Level 2 MiFID implementing legislation) is still awaited. FSA's full Consultation Paper on the changes to the Conduct of Business and Financial Promotions regimes is not due until October.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 31/07/2006.