Brexit Regulatory Update

The UK is now in a transition period which ends on December 31, 2020.

FCA Confirms MoUs with ESMA and EU Securities Regulators

In February 2019, the FCA announced the agreement of Memoranda of Understanding (MoUs) with the European Securities and Markets Authority (ESMA) and EU regulators; these MoUs cover cooperation and exchange of information and were due to take effect in the event that the UK left the EU without a Withdrawal Agreement.

The UK has since left the EU with the Withdrawal Agreement in place on January 31, and the UK has entered a transition period. EU law continues to apply in the transition period, thus these MoUs have not yet been required to take effect. However, it has been clarified by the FCA, ESMA and EU regulators that these MoUs remain relevant and appropriate and will come into effect at the end of the transition period, which is set to expire on December 31, 2020. 

Firms should refer to the FCA’s Brexit pages and consult further specific sectoral information, which the regulator will continue to keep under review.

The notice can be read here.

ESMA Tells Market to Continue Preparations for the End of the UK Transition Period

The European Securities and Markets Authority (ESMA) has urged financial market participants to finalize preparations and implement suitable contingency plans as the end of the UK’s transition period with the EU approaches. This transition period is due to end on December 31, 2020, and ESMA has confirmed that Memoranda of Understandings (MoUs) agreed back in 2019 on cooperation and information exchange concluded with the FCA remain valid and will come into effect once the transition period ends.

On January 1, 2021, financial market participants whose activities might be impacted by the change should have fully implemented their contingency measures. All entities should also have provided appropriate information to their clients regarding any resulting consequences stemming from the end of the transition period.

ESMA have previously published Brexit statements, in particular ESMA’s general opinion to support supervisory convergence in the context of the UK withdrawing from the EU issued on May 31, 2017 and sector-specific opinions issued on July 13, 2017, and these statements remain relevant and should continue to be followed. ESMA has stated that they will continue to review their Brexit-related statements, in particular in relation to operational issues.

For more information, please click here.