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M2G 2.4 MiFID II onshoring and SYSC

M2G 2.4.1 G

1The combination of senior management and systems and controls requirements for firms in a directive and regulation means that FCA rules are used to onshore2 the provisions in the directive. As such, the approach to onshoring2 MiFID II retains the familiar approach of the common platform and the following2:

  1. 2the application of common platform requirements in SYSC 1 Annex 1 Part 3 and 2Table B for MiFID optional exemption firms;

  2. ● a2 rule which has the effect, amongst other things, of extending the application of certain parts of the MiFID Org Regulation to all of a UK MiFID investment firm’s designated investment business, MiFID or otherwise (SYSC 1 Annex 1 2.8AR) (in the Handbook, the definition of ‘MiFID investment firm’ captures any UK firm to which MiFID would apply if the United Kingdom were a Member State)2;

  3. ● a2 rule which extends the application of the MiFID Org Regulation in relation to general organisational requirements, compliance, risk management, internal audit, responsibility of senior management, remuneration policies and practices and outsourcing to all of a MiFID optional exemption firm’s designated investment business, by way of rule or guidance depending on the individual provision (SYSC 1 Annex 1 3.2CR discussed further in M2G 2.5);

  4. 2signposting references in the application provisions to individual SYSC chapters to identify the relevant articles of the MiFID Org Regulation which supplement the rules implementing the MiFID requirements. These are also listed in the new Table C in SYSC 1 Annex 1;

  5. ● chapter SYSC 10A2on recording telephone conversations and electronic communications2;

  6. ● section SYSC 18.62 on the whistleblowing obligations imposed upon MiFID investment firms which includes a signposting mechanism pointing firms to similar obligations derived from other single market legislation; and2

  7. ● section SYSC 19F2 in respect of remuneration and performance management of sales staff.