On 18 March 2025, HM Treasury (HMT) and the Chancellor of the Exchequer, Rachel Reeves, published a near-final version of a statutory instrument (SI) to reform the Markets in Financial Instruments Directive Organisation Regulation (MiFID Org Regulation). The draft Markets in Financial Instruments (Miscellaneous Amendments) Regulations 2025 (the draft SI), published alongside an accompanying policy note, is part of a wider package of reforms aimed at boosting UK capital markets’ attractiveness.
Background
The MiFID Org Regulation specifies the organisational requirements and operating conditions for investment firms, and introduces related definitions. At Mansion House 2024, the Chancellor announced the Government’s plans to make further technical changes to the wholesale markets framework, including a commitment to revoke the detailed firm-facing regulations within the MiFID Org Regulation so that they can be replaced in the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) rulebooks.
To deliver on this commitment, HMT plans to:
- Introduce separate secondary legislation to commence the revocation of the firm-facing requirements in the MiFID Org Regulation.
- Restate elements of the regulation that defines regulatory activity through the draft SI.
Draft SI
The draft SI restates the definitions from the MiFID Org Regulation which set out the regulatory perimeter, under the framework established by the Financial Services and Markets Act (FSMA) 2023. HMT flags that while the draft SI seeks to consolidate and clarify terminology, it is not intended to change the meaning or scope of definitions (although HMT may consider making amendments to definitions as part of future policy work).
The provisions set out in the draft SI include:
- Changes to Part 18A of FSMA 2000.
- Changes to the Body of the Regulated Activities Order.
- The replacement of Part 2 of Schedule 2 to the Regulated Activities Order.
- Changes to Schedule 3 to the Regulated Activities Order.
- Changes to the Recognition Requirements Regulations.
- Changes to the FSMA 2000 (Financial Promotion) Order 2005.
- Changes to the Markets in Financial Instruments Regulation 2017.
- Consequential amendments.
Timing and next steps
HMT explains that:
- The FCA has consulted on new rules to replace the firm-facing provisions of the MiFID Org Regulation, and is still accepting feedback on how to simplify or improve rules until 28 March 2025.
- The PRA plans to publish its own consultation paper in H1 2025.
- Subject to feedback on the draft SI and Parliamentary time allowing, HMT then plans to lay the draft SI before Parliament in Summer 2025.
- Commencement of the draft SI (once finalised), and the revocation of the MiFID Org Regulation and other legislation, is intended to take place following publication of final FCA and PRA replacement rules in H2 2025, in line with the regulators’ replacement rules.
Technical comments are being invited on this near-final version of the draft SI by 14 April 2024.
Discussion with fintechs
The draft SI was discussed at a meeting on 18 March 2025 between the Chancellor and senior representatives from the fintech sector. HMT noted that the Chancellor and the fintech CEOs discussed the Financial Services Growth and Competitiveness Strategy, including the biggest growth opportunities for fintechs, as well as the new draft SI which is intended to streamline regulation and boost the attractiveness of the UK capital markets.
Commenting on the announcement, the Chancellor explained that: “We are taking action to make our rulebook more competitive to support growth, the number one mission for our Plan for Change, and have asked the FCA to reform the regulatory structure around capital markets to make it work better for UK firms. This will ensure they can grow and invest across the economy, kickstarting growth and getting more money in people’s pockets.”