Institutional Trading/Broking
We provide services to a range of wholesale clients that undertake trading and broking activities across a variety of sectors including equities, bonds and derivatives.
Firms trading traditional derivatives, such as foreign exchange options, contracts for difference, and certain forward contracts have been subject to FSA regulation for some time; whereas firms trading exotic derivatives, including commodity, carbon and freight derivatives, may have only relatively recently found themselves subject to FSA requirements as a result of the widening of the scope of regulation brought about by MiFID.
Recently operators of Multilateral Trading Facilities ("MTFs") have been subject to much closer scrutiny by the FSA, and have seen material changes to the capital resources requirements applying to them. We are well positioned to help all of these types of firm. We have in-depth experience of providing perimeter guidance in relation to whether an investment type or proposed activity is subject to FSA regulation, assisting firms in obtaining FSA authorisation, and providing ongoing support.
There are a number of difficult regulatory issues which are of particular relevance to this sector, and which we have helped firms to resolve, including:
- application of the best execution rules;
- application of capital requirements, including the use of waivers;
- determining whether certain forward contracts fall within the definition of specified investments and are therefore subject to FSA regulation; and
- providing advice on whether a particular set of activities is likely to constitute the operation of an MTF.
We have a particular expertise in relation to freight derivatives helping firms to prepare for the implementation of MiFID, undertaking a major client categorisation project for a key player in this sector, and providing ongoing support to that key player.
We also specialise in assisting firms that offer foreign exchange derivatives, providing advice on a range of topics including the application of the FSA's client money rules to this sector, ensuring that marketing communications directed at retail clients meet the FSA's requirements whilst at the same time remaining commercially-focused, and the application of the prudential requirements.
In addition, we have a number of clients which trade carbon credits.