The U.K. Financial Conduct Authority called on financial services firms to have contingency plans in place in the event of a no-deal Brexit in areas where it would not be appropriate for the U.K regulator to adopt temporary regulation.
Aimed at minimizing market disruption if the U.K. leaves the EU without a withdrawal agreement, the FCA said Friday it intends to help firms meet European regulatory obligations.
However, there are areas that are off-limits to the U.K. watchdog, including reporting rules under the Markets in Financial Instruments Directive II and obligations under European Market Infrastructure Regulation. The FCA expects money management firms that are subject to these rules to begin preparations to comply with changes that will apply beginning March 29.
The U.K.'s transaction reporting regime under MiFID II will change as a result of Brexit, including the requirement to submit financial reference data, the FCA said. "This includes European Economic Area firms entering the temporary permissions regime, as well as U.K.-approved reporting mechanisms that submit reports on behalf of firms," the FCA said.
Non-U.K. firms wishing to use temporary permissions should ensure they have completed the necessary steps by the exit day, the FCA said.
Also beginning March 29, all firms trading derivatives under EMIR will be required to report to a U.K.-registered trade repository, the FCA added.
Separately, the FCA and EU regulators agreed Thursday to allow supervisory cooperation, and the enforcement of rules and exchange of information in the event of a no-deal Brexit.
"In the event that the U.K. leaves the EU without an agreement, it gives us the flexibility to allow firms and other regulated persons to phase in the regulatory changes that would need to be made as a result of 'onshored' EU legislation" Nausicaa Delfas, executive director of international at the FCA, said in a news release. "This will give firms certainty, ensure continuity and reduce the risk of disruption."
