In light of the ongoing uncertainty surrounding the United Kingdom (“UK”) departure from the European Union (“EU”), regulators and institutions on both sides of the channel have taken a range of initiatives in order to counteract the most dramatic consequences of the UK departure from the EU without a withdrawal agreement and implementation period (“no deal Brexit”).
It has been confirmed today that the UK Financial Conduct Authority (“FCA”) have signed a memorandum of understanding (“MoU”) with the pan-European regulator, European Securities and Markets Authority (“ESMA”), in order to secure post-Brexit portfolio management delegation for UK asset managers.
In their statement, the FCA confirmed that, in case of no deal Brexit, the MoU covers:
- supervisory cooperation;
- enforcement and information exchange; and
- supervision of credit rating agencies and trade repositories.
The FCA added that until a withdrawal agreement is reached, it will continue to plan for a range of potential outcomes.
This MoU between ESMA and the FCA brings much needed certainty for asset managers seeking to finalise contingency plans, and 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.
It is also a welcome news for savers across Europe, who together, have some £1.8 trillion of savings managed by asset managers in the UK. This will ensure that delegation to the UK can continue, mitigating the disruption brought by a no deal Brexit.
For more information on, or any guidance or advice on the impact of Brexit, Cleveland & Co external in-house counsel, your specialist outsourced legal team are here to help.
For previous developments, please see our updates on the FCA’s and the EU Commission’s no deal Brexit contingency plan please see: FCA TPR, and Brexit: impact on financial services