UK and EU Securities Regulators Agree to Cooperate in Event of No-Deal Brexit

The Financial Conduct Authority (“FCA”), the European Securities and Markets Authority (“ESMA”) and other EU securities regulators agreed to two Memoranda of Understanding (“MoUs”) regarding the activities of credit rating agencies, trade repositories and asset managers. These MoUs would be effective only if UK and EU authorities fail to reach an agreement over Brexit.

The multilateral MoU with the FCA, the EU and European Economic Area (“EEA”) National Competent Authorities (i) includes “supervisory cooperation, enforcement and information exchange” and (ii) allows the regulators to access information on, “amongst others, market surveillance, investment services and asset management activities.” The MoU allows 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. For the funds industry, the MoU provides certainty to firms that delegate fund management to UK asset managers.

The MoU, with the FCA and ESMA, concerns information regarding the supervision of credit rating agencies and trade repositories. The MoU paves the way to allow EU counterparties to continue using those trade repositories.

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