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FCA endorses SEC no action letter

The FCA has endorsed SEC’s extension of its staff ‘no-action letter’ until 3 July 2023.  The no-action letter addresses potential conflicts between US regulation and MiFID 2.

MiFID 2 permits investment firms either to use their own resources to directly cover research costs or, if they charge clients for research, to adequately disclose and account to their clients for those costs.  SEC’s no-action letter means that up until expiry of the extended period of no-action relief, US broker-dealers may receive payments for research from firms that are subject to MiFID 2 (or the equivalent rules of EU Member States) without being considered an “investment adviser” under US law.  This will also apply to UK firms if the UK withdraws from the EU before or during the extended period.

The FCA’s own findings from September 2019 show that rules have improved asset managers’ accountability over costs which has saved investors millions of pounds.  FCA will conduct a similar review in 12-24 months’ time which will evaluate firms’ continuing compliance with FCA’s rules.

Jonny Williams

Jonny Williams