The FCA has outlined what it sees as the key challenges for firms reporting to the FCA in respect of Brexit.
Speaking at the Infoline Trade and Transaction Reporting Conference last week, Ana Fernandes, who leads the Markets Reporting Team at the FCA, gave her views alongside Wouter van Bronswijk from the Netherlands’ AFM, Rob Knight (Chair) and myself.
It was great to get an opportunity to hear the thoughts of both EU and UK regulators as a possible no-deal Brexit lurks around the corner.
Here is a summary of the key takeaways for firms reporting to the FCA.
- Pre and post Brexit reporting consistency: The FCA has been working to keep disruption to a minimum. Hence there is broadly full consistency between pre and post Brexit reporting to the FCA. The regulator is in the process of drafting the Statutory Instrument text, which will be published next year. This will look to address some current deficiencies encountered since MiFID II go live and there will be a consultation undertaken with the industry on the proposals to seek their views.
- No Transitional relief: “Market Abuse does not go on holiday” so transaction reports are required from Day 1 post-Brexit. There will be “no excuses”. The current transition period is operating up to 31 December.
- UK firms must use UK FIRDS: The scope of instruments within the regime is being maintained to include all of the EU FIRDS instruments but will also include UK-only instruments. Further, the UK version of an instrument will take precedence over any EU version instruments which may cause differences between the two data sets.
- Loss of Article 4 Transmission: UK firms and EU firms transmitting to each other can no longer make use of the Article 4 transmission process as the UK will become a third country. Firms have to make sure they are connected to FCA FIRDs by the cutover date. UK FIRDS has been live and operational since March 2019 to support this.
- Final point: Firms have to be ready on Day 1, there is no transitional period or holiday. The FCA’s expectation is that all firms should be compliant.
Many thanks to Richard Horsler and the team at Infoline for organising the conference.
If you’d like guidance or advice on preparing for Brexit from one of our regulatory specialists, please contact us.