The FCA’s Approach To Brexit
Speech delivered by Nausicaa Delfas, Executive Director of International at the FCA, at Bloomberg/TheCityUK.
Speaker: Nausicaa Delfas, Executive Director of International
Event: Bloomberg/TheCityUK, London
Delivered: 19 July 2018
Note: this is the speech as drafted and may differ from delivered version
It has been a remarkable year in international affairs – dominated by change. So, I would like to take a step back today and offer a few reflections on an area which I know matters to many of you, and where we aim to give you some consistency: the FCA’s preparations for the UK’s withdrawal from the EU.
— TheCityUK (@TheCityUK) July 19, 2018
Since my appointment earlier this year, I have been meeting many of you, regulated firms in the UK, and your advisers, business groups and corporate treasurers, as well as my regulatory counterparts in Europe, US and Asia, and consumer representatives. I have valued hearing directly from you about the impacts and issues for you, in the withdrawal of the UK from the EU, and using these insights to shape FCA’s approach and preparations. I have also been building up the International Division at the FCA, to ensure we can drive forward the policy and delivery work that is required. And as a member of the FCA’s Executive Committee, I have been working with my colleagues to balance this work against the FCA’s other priorities, of regulating 58,000 firms. It is certainly a most interesting time to be in this role.
So today I will set out:
- how we at the FCA are preparing, behind the scenes, for a smooth transition
- what we expect from firms we regulate, and
- our future vision
We will support the Government throughout the Brexit process with technical advice and our specialist expertise.
I should preface my comments by reiterating that the FCA takes no position on whether Brexit is a good or bad thing in itself. Our focus, as always, is on making financial markets work well, and meeting the FCA’s three statutory objectives, to:
- Secure an appropriate degree of protection for consumers.
- Protect and enhance the integrity of the UK financial system.
- Promote effective competition in the interests of consumers.
And to deliver on these objectives we will support the Government throughout the Brexit process with technical advice and our specialist expertise.
- With 8 months until we exit the European Union in March 2019, it is important we all – regulators and industry – continue to plan for a range of scenarios.
- The FCA is working closely with the Government, Bank of England, our regulatory partners across the world, and firms, to enable a smooth transition at exit.
In terms of our longer-term future – our markets will remain highly integrated whatever the outcome of Brexit. We believe a good outcome is achievable – one that is in the interests of both the UK and the EU.
Preparing for a smooth transition
Our starting assumption is that a transition or implementation period, from March 2019 until the end of December 2020, will form part of the final agreement with the EU. We think this is a good thing for both sides. It will allow more time to prepare, smooth the transition, and it is something we have been calling for, for some time.
However, we know that this is part of the overall negotiations and therefore we must prepare for all scenarios, including the possibility of a ‘no-deal’ or ‘hard’ Brexit at March 2019. And that is what we are doing: across the FCA, together with colleagues from the Bank of England and the Government, we have been working to develop a number of safeguards and contingencies, in the event of a hard Brexit, to ensure that ‘day 1’ works smoothly.
Let us just consider some examples of the challenges we face in doing this – there are ‘cliff edge’ risks that would be caused by abrupt loss of passporting. Some are within our gift to resolve, others are not, and require agreement with the EU.
The rest of the speech can be read here
This complements the previous statement on the use of UK data in MiFID II calculations.
Talent pool has been drained by fewer EU tech graduates coming to the UK.
EuroCCP will provide post-trade services to EU-based entities of three UK trading venues.
The firm is bringing in new senior regulatory staff to expand its existing UK team.
These opinions may change depending on the final timing and nature of Brexit.