FCA and ASIC to strengthen cooperation post-Brexit

FCA and ASIC to strengthen cooperation post-Brexit

The UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) have just announced that they have agreed two MoUs to ensure there is continuity once the UK leaves the European Union.

Last week, ASIC announced that new laws are about to protect financial service consumers in Australia. According to several independent sources, ASIC will get the same powers as ESMA, and they are planning to introduce the same CFD/FX-restrictions in Australia from 2021 on.

Andrew Bailey

Andrew Bailey, FCA

Andrew Bailey, Chief Executive, FCA commented:

The FCA and ASIC have always had a strong relationship, which will continue after Brexit. The MoUs we have agreed today will ensure the FCA and ASIC have uninterrupted exchange of information and can supervise cross-border activity of firms. They provide a strong signal to the markets that the UK will continue to play an important role after Brexit. The MoUs will also provide much-needed assurance to our regulated stakeholders.

We also support the continuity of existing equivalence decisions which will minimise disruption for firms in the UK and Australia.

James Shipton

James Shipton

James Shipton, Chair, ASIC said:

ASIC is pleased to have cooperation arrangements in place with the FCA on trade repositories and alternative investment funds. While the FCA and ASIC have always maintained a very close relationship on supervisory and enforcement matters, these two MOUs will enhance cooperation and information sharing between the authorities. Our commitment to ensuring the continuity of equivalence decisions will provide certainty to businesses and consumers and contribute to a fair, strong and efficient financial system.

These MoUs will enter into force when the UK leaves the EU, or at the end of the transition period if a Withdrawal Agreement is in place.

The complete text of the MoUs as seen on FCA’s official website reads as follows:

MoU on trade repositories

A new MoU on trade repositories is required because the FCA will acquire functions and supervisory powers in relation to trade repositories, which are currently supervised at the European level by the European Securities and Markets Authority (ESMA).

The MoU on trade repositories will ensure that ASIC can continue to access data on derivatives contracts held in UK trade repositories, where the information is needed for ASIC to fulfil its responsibilities and mandates. The MoU is established under Article 76(2) of the UK’s onshored European Market Infrastructure Regulation (UK EMIR). This provision aims at ensuring that third-country authorities such as ASIC, that do not have any trade repository in their jurisdiction, may access the information on derivatives contracts held in UK trade repositories which is relevant for their mandates.

MoU on alternative investment funds (AIFs)

The MoU on AIFs has been updated to reflect the regulatory regime that will apply in relation to AIFs in the UK post-Brexit. The MoU on AIFs provides a framework for the FCA and ASIC to work together to ensure alternative investment fund managers (AIFMs) and AIFs that operate on a cross-border basis are properly supervised in the UK and Australia. The MoU will cover Australian managers that manage or market AIFs in the UK and UK managers that manage or market AIFs in Australia, as well as their delegates and depositaries. The existence of an MoU between ASIC and the FCA is a precondition of the UK’s AIFM regime, for allowing managers from third countries access to the UK market.

Equivalence Decisions

HM Treasury has confirmed that existing equivalence decisions granted in respect of Australia by the European Commission (EC) before exit day, will generally be incorporated into UK law and will continue to apply post-Brexit. The UK will adopt existing EU equivalence decisions that relate to Australia’s supervisory and regulatory regime for trading venues, OTC derivatives markets and credit rating agencies.

Similarly, ASIC remains committed to take steps to provide, where appropriate, for continuing recognition post-Brexit of the equivalence of the UK’s regulatory and supervisory regime in relation to UK-based foreign financial services providers and market operators that operate in Australia under licences and exemptions or are otherwise recognised for the purposes of the Australian regulatory regime.

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