Risk control—post MiFID II implementation
Risk control—post MiFID II implementation

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Risk control—post MiFID II implementation
  • MiFID II risk control requirements
  • Risk control rules applying from 3 January 2018
  • Application of risk control rules from 3 January 2018
  • General requirement for effective risk control processes
  • Risk assessment
  • Risk management
  • Reverse stress testing
  • Remuneration for risk management function
  • Credit and other risks
  • more

BREXIT: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance, see Practice Notes: The impact of Brexit on the MiFID II regime and Preparing for Brexit: CRR and prudential regulation—quick guide.

This Practice Note examines:

  1. the risk control requirements in

    1. the recast Markets in Financial Instruments Directive 2014/65/EU (MiFID II), and

    2. a MiFID II Level 2 measure, Commission Delegated Regulation (EU) 2017/565 (the MiFID II Organisational Regulation), and

  2. the rules and guidance on risk control (the risk control rules) which apply to firms with effect from 3 January 2018 (the date of implementation of MiFID II) as set out in:

    1. the MiFID II Organisational Regulation, and

    2. the Senior Management Arrangements, Systems and Controls sourcebook in the Financial Conduct Authority (FCA) Handbook (SYSC), and the Prudential Regulation Authority (PRA) Rulebook, as respectively amended in part to reflect the requirements of MiFID II and the MiFID II Organisational Regulation

MiFID II and the Markets in Financial Instruments Regulation (EU) 600/2014 (MiFIR) entered into force on 2 July 2014. The majority of the provisions of MiFID II and MiFIR have effect from 3