FCA has finalised its proposals on changes to the research rules and removal of the best execution reporting in RTS 27 and 28 in relation to UK MiFID. FCA remains of the view that the changes were necessary to ensure the rules are better tailored and more proportionate to the risks arising. It wants to improve availability of research on SME firms by implementing an exemption to the inducements rules that ban the bundling of research and execution fees where the research is on issuers below a market capitalisation of £200m. Its changes to the best execution reporting requirements are intended to remove the burden of providing reports that do not appear to benefit users.
The changes relating to best execution reports take effect on 1 December 2021, and the inducement exemption from 1 March 2022. This will cover, in addition to research on SMEs, FICC research, research provided by research providers who do not provide execution services and are not part of a group that includes a firm offering execution services, and openly available research.