The initial rules published in July contained an exemption from the telephone taping requirement for non-MiFID firms dealing in unlisted shares. However, the exemption left out a significant number of firms engaged in private equity and venture capital business.
Buried within the innocuously titled FCA Handbook Notice 48 are some late amendments to the taping rules that will significantly benefit a number of private equity and venture capital firms and other firms dealing in unlisted securities. Under the updated rules, MiFID portfolio managers and article 3 firms will now be able to benefit from the exemption to the taping requirement in respect of unlisted shares.
Unfortunately, the FCA’s discretion to dis-apply the rules is limited by the MiFID Level 1 text. As a result, some private equity and venture capital firms – those with advisor/arranger permissions – do not benefit from an explicit exemption.
Firms that deal in unlisted securities should now reassess the applicability of the telephone taping provisions to their business. It may be the case that they will no longer be relevant.