New law gives FCA powers on “ancillary activities” scope

Changes to the RAO give the FCA a rule making power to set the criteria for determining whether commodity and emissions dealers need authorisation as investment firms. The conditions for the “ancillary activities exemption” have previously been set in legislation. As part of the Wholesale Markets Review, HM Treasury wanted not only to give the FCA the flexibility to set the conditions but also to allow it to introduce a test based on specific monetary levels of activity alongside the test of whether the activity is ancillary to the person’s business at group level.

The changes also allow the revocation of some remaining assimilated provisions, which has been done with a transitional period from the main effective date of 1 January 2027 to give firms that need it 12 months to transition to the new regime.