“This is an issue we have to solve before the end of this year,” the 58-year-old said in a Bloomberg TV interview Thursday. “We need to solve it in a pragmatic fashion, I don’t want to see firms left in the horns of a dilemma with: ‘Two sets of authorities pointing in different directions, what do we do?”’
Bailey said FCA representatives attended a meeting with the 40 biggest asset managers and banks that was aimed at seeking clarity on the financial markets overhaul.
The meeting “was really about one particular issue, and it’s about research,” Bailey said.
It’s one of the thorniest provisions in the revised Markets in Financial Instruments Directive, a sweeping update to an EU law known as MiFID: a requirement that brokerages charge managers for research, rather than offering it as a free perk. But the change conflicts with the U.S., where firms that charge clients for analysis can be deemed to be providing investment advice, meaning they’d have to comply with additional, costly, restrictions.
“Firms have rightly pointed out” that they can “get stuck in the middle of that,” Bailey said.
Bailey said while the issue hasn’t been settled yet, “there are various things that might be done.”
For example, “there are discussions about the way firms organize themselves, this is a question about where the research is provided from,” he said.
Bailey also said a “high proportion” of firms will be ready for Jan. 3. The FCA has said it won’t be too strict on firms that don’t comply right out of the gate come January.
In a wide-ranging interview, Bailey also said:
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Regulators are considering a transition period before implementing a new authorization system for non-U.K. banks after Brexit. [...]
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