Brexit Breakthrough Reached on Finance, Helping Avert No-Deal Rupture
(Bloomberg) -- British and European Union regulators agreed to cooperate on oversight of financial firms and share key market information in a move that will help avert problems arising from a no-deal Brexit scenario, especially for asset managers.
- The European Securities and Markets Authority detailed two cooperation agreements, known as a memoranda of understanding, with the U.K. Financial Conduct Authority, as politicians in both jurisdictions seek to cushion the effects of the U.K. leaving in March without a divorce deal
- The agreement smooths the way for regulators in the U.K. and remaining 27 EU member states to cooperate on oversight of investment funds as well as to share data, including for potential market abuse investigations
- Such arrangements are essential for EU regulators to oversee mutual funds that delegate investment decisions to portfolio managers in New York, Asia or London after Brexit
- The deal also allows authorities to exchange information on credit rating agencies and trade repositories
- The agreements should “minimize the potential for disruption, which we know is particularly important for the investment management sector, credit rating agencies and trade repositories,” FCA Chief Executive Andrew Bailey says in a statement
- U.K. and EU financial regulators have been stepping up efforts to ensure financial markets can withstand a no-deal scenario, including by allowing EU banks to continue using market infrastructure in London
- Luxembourg’s financial regulator has said that investment funds will be able to delegate activities to the U.K. even if the country leaves the EU without an agreement, provided that some conditions -- including cooperation with the FCA -- are met
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