What happened: MFA recommended reforms to streamline the UK’s client categorisation framework in a letter submitted to the Financial Conduct Authority (FCA). The letter is in response to the FCA consultation paper on the Markets in Financial Instruments Directive (MiFID) Organisational Regulation. This regulation examines the rules governing access to alternative asset classes and alternative investment funds (AIFs).
Why it matters: The UK’s current client categorisation framework limits access to certain alternative asset classes for sophisticated investors who would qualify to invest in alternatives in other jurisdictions.
MFA on the issue: MFA recommends right-sizing the rules for client categorisation by:
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Establishing a single unified professional client opt-up process for investor categorisation for both MiFID and non-MiFID activities
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Modernising the professional client opt-up criteria to more reliable indicators of investor qualification
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Harmonising the definition of large undertakings that qualify as per se professional clients for MiFID and non-MiFID business
MFA issued the following statement in conjunction with the letter:
“Modernising the UK’s client categorisation framework will help increase capital flows, expand investor choice, and drive economic growth. Ensuring that sophisticated investors can invests in AIFs is in line with the UK’s growth and competitiveness agenda and will strengthen London’s position as a global financial services centre.” — Jillien Flores, Chief Advocacy Officer
What’s next: The FCA will review stakeholder responses to its consultation and then issue a policy statement outlining the planned regulatory changes for client categorization.
