The UK Financial Conduct Authority (FCA) has published updated information on the ramifications of Brexit in a no deal scenario.
Currently, the UK is scheduled to exit the European Union on October 31st. Recently, there has been some more positive chatter on negotiations, and the deadline may be extended, but Brexit risk remains front and center at the FCA.
The FCA is advising firms to take “reasonable steps” to comply with post-exit MiFID reporting and EMIR trade reporting requirements.
The FCA states that if the UK leaves the EU without a deal, passporting will end.
Any EEA passporting firm wishing to continue operating in the UK will need to notify the FCA by 30 October that they wish to enter the Temporary Permissions Regime (TPR). Fund managers have until 16 October 2019 to inform the FCA if they want to make changes to their existing notification.
After exit, firms who notified the FCA of their intention to use the TPR will be contacted and provided with a landing slot when they will need to submit their application for full UK authorisation.
Upon authorization, the FCA states that it generally expects “firms to have a physical presence in the UK to help ensure effective supervision.”
Nausicaa Delfas, Executive Director for International at the FCA said:
‘The FCA has been preparing to ensure UK financial services are well placed if the UK leaves without a deal. Today, we have set out steps certain firms need to take – it is important that firms are as prepared as possible if there is a no-deal exit, and that they are aware of what they need to do.”
On MiFID transaction reporting, which is a crucial part of the FCA’s approach to market oversight, firms that are not able to comply fully with the regime at the time of the UK’s withdrawal from the EU will need to be able to back-report missing, incomplete or inaccurate transactions. This should be completed as soon as possible after October 31, 2019.
On EMIR reporting, FCA-registered trade repositories (TRs) should be ready to receive reports from UK reporting counterparties and be in a position to share these with UK authorities. FCA-registered trade repositories must ensure the migration of outstanding trades and historic EMIR data, and that the details of any trades newly concluded, terminated or modified by UK reporting counterparties on 1, 2, and 3 November 2019, are embedded in their systems. These need to be available for UK authorities by 4 November 2019.
UK reporting counterparties should ensure details of derivative transactions that are concluded, terminated and/or modified on 30 and 31 October 2019 which cannot be reported before the point of exit, are reported to an FCA-registered TR by no later than 4 November 2019.
The FCA has a dedicated webpage to inform firms on Brexit.
