Schedule 2: Transitional amendments Part 1 – Amendments to the Markets in Financial Instruments Regulation Paragraph 17: Suspension or modification of the DTO
Paragraph 17 of the Schedule introduces a new Article 28a into MiFIR. Paragraph 1 of Article 28a MiFIR gives the FCA the power to suspend or modify the DTO if the FCA considers it necessary to prevent or mitigate disruption to financial markets and advances one or more of the FCA’s operational objectives.
	Paragraph 2 outlines specific ways in which the DTO may be suspended or modified. It specifies that changes can be made in respect of either the persons, derivatives, or classes of derivatives to which the obligation applies, or to the trading venues on which the transactions must be concluded. It also gives the FCA the ability to make the suspension conditional on any criteria, as it deems appropriate.
	Paragraph 3 requires the FCA to have regard to its new competitiveness and growth objective in section 1EB of FSMA 2000 when using the power.
	Paragraph 4 explains that the FCA must consult with the Bank of England and the PRA if the suspension or modification could have an impact within the PRA’s remit (for example, if the change would apply to a person which is authorised by the PRA or if it would impact the discharge of the PRA’s functions).
	Paragraph 5 specifies that the FCA must obtain consent from HM Treasury before issuing a direction. Once the FCA has submitted a proposed direction to HM Treasury, HM Treasury must provide a written response within four weeks (and HM Treasury are deemed to consent to the issuing of the direction if no response is provided within that period).
	Paragraph 6 outlines that when giving a direction to modify the DTO, the FCA must also prepare a statement which explains the rationale behind issuing the direction, and any relevant guidance.
	Paragraph 7 requires the FCA to publish this direction and statement, and paragraph 8 requires HM Treasury to lay a copy of the direction and the statement before Parliament.
	Paragraph 9 outlines that if the FCA wish for a direction to have effect for longer than 6 months, it must publish a statement explaining why the criteria for the use of the direction are still being fulfilled. This statement is to be published as soon as reasonably practicable after each 6-month period (which starts on the day the direction is given).
	Paragraph 10 clarifies that the FCA may publish the statement in whatever way it thinks will best bring it to the attention of the public.
	Paragraph 11 clarifies that the FCA can vary a suspension or modification by issuing a new direction. Paragraph 12 specifies that the variation of a direction is not to be treated as the giving of a new direction in respect of the requirement to publish a statement after every 6-month period (as outlined above). It also explains that certain requirements applying to the issuing of an initial direction (such as the obligation to publish guidance in connection with the direction) do not apply to a direction which merely revokes a previous direction.
	Paragraph 13 stipulates that the issuance of an FCA direction to modify or suspend the DTO does not fall within scope of requirements in the Financial Services Act 2012 which concern the investigation of complaints against regulators in relation to the exercise of certain functions. Complaints relating to the exercise of this power of direction would not therefore need to be dealt with through the complaints scheme established under the relevant provisions of the 2012 Act.