FCA Agrees Memoranda of Understanding With EU Regulators02.01.2019
The MoUs cover cooperation and exchange of information in the event the UK leaves the EU without a withdrawal agreement and implementation period. Until an agreement is reached the FCA will continue to plan for a range of scenarios, including if the UK leaves the EU without an agreement.
— ESMA (@ESMAComms) February 1, 2019
The MoUs are:
- a multilateral MoU with EU and EEA National Competent Authorities (NCAs) covering supervisory cooperation, enforcement and information exchange; and
- an MoU with the European Securities and Markets Authority (ESMA) covering supervision of Credit Rating Agencies and Trade Repositories.
Andrew Bailey, Chief Executive of the Financial Conduct Authority, said:
‘I am pleased we have been able to agree these MoUs. They will allow for continued close cooperation in the event the UK leaves the EU without an agreement.
‘They should also minimise the potential for disruption, which we know is particularly important for the investment management sector, Credit Rating Agencies and Trade Repositories.’
These MoUs will support cross border supervision of firms and allow us to share information with our EU counterparts.
Chris Cummings, Chief Executive of the Investment Association, said: “These agreements ensure that delegation of portfolio management, and the necessary exchanges of information needed for the orderly functioning of markets, can continue regardless of the outcome of the Brexit negotiations.”
— The Investment Association (@InvAssoc) February 1, 2019
Source: Investment Association
European Fund and Asset Management Association said in a statement:
EFAMA warmly welcomes the announcement by ESMA today of the conclusion of a Memorandum of Understanding (MoU) with the UK Financial Conduct Authority (UK FCA) with a view to have in place a framework for supervisory cooperation between ESMA, the EU 27 national competent authorities and the UK FCA, in the event of a Brexit.
Having such supervisory cooperation agreements in place is required under different EU legislations (such as UCITS or AIFMD) to make it possible to delegate portfolio or risk management to an entity in a third country, like the UK. Delegation is a reliable, well-functioning model, central to ensuring investors are provided with better value and choice.
Today’s announcement was met with a sigh of relief by asset management companies on both sides of the Channel as it removes a great deal of legal uncertainty in their preparation for the worst case scenario of a no-deal Brexit.
Regulatory and supervisory cooperation between ESMA and the UK FCA is crucial and will require substantial resources to be dedicated on both sides. Such cooperation should drive mutual efforts to exchange information and data, and avoid unintended divergences in the implementation of future regulation between the EU and the UK potentially creating an accidental unlevel playing field.
Commenting on the conclusion of the MoU, EFAMA’s Director General Tanguy van de Werve said: “This is a very important step that EFAMA has been calling for many months, as it will help avoid disruptions in the provision of asset management activities. Ensuring that delegation continues to be authorised as it is today is of paramount importance to the asset management industry. It brings comfort to the industry in their Brexit contingency planning but, most importantly, it ensures that EU investors will continue to access world leading expertise in the management of their savings.”
The agreement will establish an ongoing forum to discuss voluntary regulatory cooperation.
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