UK FCA And Australian ASIC Pledge Close Cooperation
The UK Financial Conduct Authority, the main financial regulatory body in the UK, and the Australian Securities and Investments Commission (ASIC) singed two Memoranda of Understanding (MoUs) that touch upon trade repositories and alternative investment funds (AIFs). The strengthening of relationships aims to offset the potential post-Brexit risks and maintain continuity once the UK withdrawal from the European Union (EU).
ASIC And FCA Closer Than Ever Despite Brexit
Both regulators vowed to increase cooperation after Brexit. Cross border relationship between ASIC and the FCA is of great importance within the framework of G-20 talks. The MoUs will enter into force immediately after the EU legislation has no longer effect on the UK territory, i.e. when the UK leaves the bloc or, if a Withdrawal Agreement is reached, at the end of the transition period.
FCA CEO Andrew Bailey commented on the new cooperation potential:
The FCA and ASIC have always had a strong relationship, which will continue after Brexit. The MoUs we have agreed today will ensure the FCA and ASIC have uninterrupted exchange of information and can supervise cross-border activity of firms. They provide a strong signal to the markets that the UK will continue to play an important role after Brexit. The MoUs will also provide much-needed assurance to our regulated stakeholders.
He added that the FCA would support the continuity of the current equivalence decisions, which will reduce disruption for companies in both countries.
On the other side, James Shipton, chairman of ASIC, said:
ASIC is pleased to have cooperation arrangements in place with the FCA on trade repositories and alternative investment funds. While the FCA and ASIC have always maintained a very close relationship on supervisory and enforcement matters, these two MOUs will enhance cooperation and information sharing between the authorities.
MoU on Trade Repositories
The agreement on trade repositories was needed as the UK regulator will receive supervisory powers in relation to trade repositories after Brexit. Currently, these are under the monitoring of the European Securities and Markets Authority (ESMA).
The MoU between the FCA and ASIC will make sure that the latter may continue to access information on derivatives held in the UK trade repositories, in the case ASIC needs relevant data to fulfil its mandates. The MoU is set under Article 76(2) of the UK’s onshored European Market Infrastructure Regulation (UK EMIR), whose goal is to ensure that third-country regulators, such as ASIC, that don’t hold any trade repository in their jurisdiction can access data on derivatives in UK trade repositories when needed.
MoU on Alternative Investment Funds
The agreement on AIFs has been renewed to touch upon the regulatory approach to be considered in relation to AIFs after Brexit. The current MoU establishes a framework that will enable the FCA and ASIC to collaborate to ensure that AIFs and alternative investment funds managers (AIFMs) that operate on a cross-border basis are adequately supervised in both countries. Thus, the agreement will cover British managers that operate and market AIFs in Australia or Australian managers that operate or promote AIFs in the UK.
The updated cooperation comes after the Australian parliament approved last week new product intervention powers for the Australian regulator. Thus, the close relationship will become even more relevant when both the FCA and ASIC expand their supervisory and intervention powers.
The FCA is actively preparing for the UK’s withdrawal from the EU. At the end of last month, the regulator reaffirmed its intention to continue the close relationship with the US Securities and Exchange Commission (SEC) after Brexit. The two parties updated two MoUs, which were initially signed before 2013.
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