Legal Shorts 03.04.20 including FCA Statement on work-related travel – responsibilities of Senior Managers

FCA Statement on work-related travel – responsibilities of Senior Managers

On 29 March 2020, the FCA updated its statement on how firms should prioritise who should need to travel to the office and the responsibilities of Senior Managers in doing so. The statement applies to all FCA-regulated firms across the UK, including in Scotland, Wales and Northern Ireland. We summarise some of the salient points below:

  • Each firm’s designated Senior Manager or equivalent person is responsible for identifying which of their employees are unable to perform their jobs from home, and have to travel to the office or business continuity site. The FCA stated that it expects the total number of roles requiring an ongoing physical presence in the office to be far smaller than the number of workers needed to ensure all of a firm’s business activities continue to function on a business as usual basis.
  • The UK Government has made clear that employers and employees should discuss their working arrangements, and employers should take every possible step to facilitate their employees working from home, including providing suitable IT and equipment to enable remote working, including:


            • financial advisers, as they can offer their services online or by phone;
            • staff who can safely and securely trade shares and financial instruments from home; and
            • business support staff, such as those in IT where they can triage issues from home, unless they are looking after specific equipment or technology.


ESMA clarifies rules on best execution reports

On 31 March 2020, ESMA issued a public statement regarding the general best execution reports required under MiFID. Information published is in accordance with RTS 27 and RTS 28 is, respectively, intended to (i) provide the public and firms with relevant data to measure the quality of execution on execution venues and (ii) enable the public and investors to evaluate the quality of a firm’s execution practices by requiring publication of valuable information about how and where the firm has executed client orders.

Due to the unprecedented conditions, ESMA recommends that National Competent Authorities (NCAs) consider the possibility that:

    • execution venues unable to publish RTS 27 reports due by 31 March 2020 may only be able to publish them as soon as reasonably practicable after that date and no later than by the following reporting deadline (i.e. 30 June 2020); and
    • firms may only be able to publish the RTS 28 reports due by 30 April 2020 on or before 30 June 2020.
    • ESMAS continued, stating that:
    • it encourages NCAs not to prioritise supervisory action against execution venues and firms in respect of the deadlines of the general best execution reports for the periods referred to above;
    • it recommends that firms and execution venues keep records of the internal decisions taken in relation to the expected delay; and
    • firms should remember their core obligations to achieve best execution for clients and to ensure fair order handling and allocations during current market volatility.


FCA statement on short selling bans and reporting

On 31 March 2020, the FCA updated its statement on short selling bans and reporting following ESMAs decision (on 16 March 2020) to temporarily amend the threshold for notifying net short positions to National Competent Authorities under the Short Selling Regulations (SSR) from 0.2% of issued share capital to 0.1%. The By way of reminder the SSR provides EU regulators and the FCA with the power to apply short or long-term bans on short sales in shares, and certain other financial instruments.

In its updated statement the FCA confirmed that the required changes have been made to its systems and that it will be ready to receive notifications at the lower threshold from Monday 6 April 2020. It states that firms:

  • are not required to amend and resubmit notifications submitted to us between 16 March 2020 and 3 April 2020l and
  • should make best efforts to report at the lower threshold from this date, but if this is not possible firms should contact to discuss further.

It concluded its statement by confirming that in line with the SSR, the new reporting obligation applies to shares for which the FCA is the relevant competent authority and not to exempted shares where the principal venue for the trading of the shares is located outside of the EU.


FCA’s expectations on financial resilience for FCA solo-regulated firms

On 26 March 2020 the FCA issued a statement regarding FCA solo-regulated firms, It stated that it hopes firms can continue operating in this challenging period, and, that it intends to provide flexibility to regulated firms to assist with this. It suggested the following:

  • firms should use capital and liquidity buffers. Firms who have been set buffers can use them to support the continuation of the firm’s activities.
  • firms should be planning ahead and ensuring the sound management of their financial resources. If the firm needs to exit the market, planning should consider how this can be done in an orderly way while taking steps to reduce the harm to consumers and the markets
  • Government schemes to help firms through this period can be part of a firm’s plans for how they will meet debts as they fall due.

The FCA concluded that if a firm is concerned it will not be able to meet its capital requirements, or its debts as they fall due, they should contact their FCA supervisor with its plan for the immediate period ahead.



Delays to directory of certified and assessed persons

The FCA has announced that following the Covid-19 outbreak, it has delayed the publication of the directory of certified and assessed persons, which was due to be published on the FS Register by the end of March. The delay will be for at least a month and the FCA will keep its webpage updated over the next month.

By way of background and as a reminder, as part of the SM&CR, firms must submit their directory persons data using the FCA’s Connect system. This data, which will be owned and maintained by firms, will be published on the FS Register.

Deadlines for submitting certified and assessed persons information was 9 December 2020 for Solo-regulated firms, however the submission deadline for Banks, building societies, credit unions and insurance companies was 9 March 2020.