FCA to strengthen ties with Australian equivalent post-Brexit

Financial Conduct Authority
(Ingus Kruklitis / Shutterstock.com)

The Financial Conduct Authority and the Australian Securities and Investments Commission today announced they have agreed two Memoranda of Understanding to ensure there is continuity between the two entities once the UK leaves the EU. Anna Tobin reports

The Memoranda of Understandings (MOU) cover trade repositories and alternative investment funds (AIFs). These agreements will provide reassurance by ensuring arrangements are in place for cross-border cooperation between the Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC). The FCA and ASIC have also announced that they are supporting the continuity of existing equivalence decisions to provide certainty to businesses post-Brexit.

“The FCA and ASIC have always had a strong relationship, which will continue after Brexit,” explained Andrew Bailey, chief executive of the FCA. “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.”

MoU on trade repositories

The two entities have entered into a new MoU on trade repositories 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 mean that the 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 ensures 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 that is relevant for their mandates.

MoU on AIFs

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 covers Australian managers that manage or market AIFs in the UK and UK managers that manage or market AIFs in Australia and their delegates and depositaries.

Equivalence decisions

HM Treasury has confirmed that existing equivalence decisions granted in respect of Australia by the European Commission 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.

These MoUs will come into force as soon as the UK exits the EU, with or without a deal.

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