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Despite being due to leave the EU in 2019, the FCA has allowed firms until 3 July this year to apply for licenses under the second Markets in Financial Instruments Directive (Mifid II).
Much maligned in the financial industry, Mifid II is designed to increase investor protection, further align countries' regulation and reinforce supervisory powers.
“We expect firms to be busy considering what impact Mifid II will have on their business and to act accordingly,” the FCA said in a statement. Yet many of those affected will scoff at this advice, due to what they feel is an onerous set of rules which have been preceded by unclear guidance.
It estimated that the cost for the country for implementing Mifid II would be £1.13bn, and there would be no monetary benefit.
Asset managers will have to reveal their fee structures, and stop lumping together the sums they pay investment banks and brokers for research and execution.
This is designed to ensure that research spending is not linked to trading volumes, and it means that managers will now have to pay for research themselves or use a complex research payment account.
Mifid II will actually come into force on 3 January 2018, and the FCA has said that any firms who have not received the relevant permissions by then face "civil, regulatory and/or criminal consequences".