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ESMA and EU securities regulators agree no-deal Brexit MoUs with FCA

1st February 2019

The European Securities and Markets Authority (ESMA) and European securities regulators have agreed Memoranda of Understanding (MoUs) with the Financial Conduct Authority (FCA) of the United Kingdom (UK).

The MoUs form part of authorities’ preparations should the UK leave the EU without a withdrawal agreement, the no-deal Brexit scenario. The MoUs will therefore only take effect in the event of a no-deal Brexit scenario. The MoUs are similar to those already concluded on the exchange of information with many third country supervisory authorities.

The MoUs are:

1. an MoU between ESMA and the FCA concerning the exchange of information in relation to the supervision of credit rating agencies (CRAs) and trade repositories (TRs). The MoU will allow ESMA to continue to discharge its mission and meet its mandate regarding investor protection, orderly markets and financial stability in the EU; and

2. a multilateral MoU (MMoU) between EU/EEA securities regulators and the FCA covering supervisory cooperation, enforcement and information exchange between individual regulators and the FCA, and will allow them to share information relating to, amongst others, market surveillance, investment services and asset management activities. This, in turn, will allow certain activities, such as fund manager outsourcing and delegation, to continue to be carried out by UK based entities on behalf of counterparties based in the EEA. (Published in ESMA.)

Our Group Fund Solutions Leader, Justin Partington commented: ‘The recent announcement by pan EU regulator ESMA that it has agreed a multilateral MoU with the FCA is a very positive development for the asset management industry. This MoU gives all UK regulated fund managers assurance that they can continue to operate and advise their funds around the origination, monitoring and execution of the investment portfolio. The MoU explicitly confirms that in the event of a No Deal Brexit, that UK managers can engage a EEA based AIFM either in-house or via a third party, and then delegate portfolio management back to the the UK based team. For our alternative fund manager client base in the UK, this contingency planning is both sensible and reassuring.’

For more information, please contact:

J.P. Harrop
Group Head of Sales
+44 20 7397 5455

Roxanne Combe
Business Development Director at SGG UK
+44 20 7397 5483

Vincent Gillet
Business Development Director at SGG Luxembourg
+352 466111 6452