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FCA pledges 'pragmatic' view on Brexit day

FCA pledges 'pragmatic' view on Brexit day

The Financial Conduct Authority has pledged to take a proportionate and pragmatic approach to supervision on Brexit day, as it recognised that leaving the EU during the working week "could pose operational challenges for firms".

In a statement out today (October 11) the regulator reminded firms to take “reasonable steps” to continue to report transaction costs in line with Mifid and the Emir trade reporting rules.

But it said it "will take a proportionate and pragmatic approach to supervising reporting around exit day".

This is particularly true in the event of the UK leaving the EU without a deal, which is anticipated to cause some disruption to businesses.

Nausicaa Delfas, executive director for international at the FCA, said: “The FCA has been preparing to ensure UK financial services are well placed if the UK leaves without a deal.

"Today, we have set out steps certain firms need to take – it is important that firms are as prepared as possible if there is a no-deal exit, and that they are aware of what they need to do."

On Mifid transaction reporting, which is a crucial part of the FCA’s approach to market oversight, firms that are not able to comply fully with the regime at the time of the UK’s withdrawal from the EU will need to be able to back-report missing, incomplete or inaccurate transactions.

This should be competed as soon as possible after October 31, 2019, it stated.

On Emir reporting, FCA-registered trade repositories should be ready to receive reports from UK reporting counterparties and be in a position to share these with UK authorities, it added.

In addition, the regulator reminded firms that under a no-deal Brexit, the current passporting system, which allows firms to trade with each other within a common EU framework, will cease with immediate effect.

Businesses who wish to continue trading across border into the UK have until October 30 to register with the FCA’s temporary permissions regime. 

The regulator said: “Any EEA passporting firm wishing to continue operating in the UK will need to notify the FCA by 30 October that they wish to enter the Temporary Permissions Regime (TPR).

"Fund managers have until 16 October 2019 to inform the FCA if they want to make changes to their existing notification. 

"After exit, firms who notified the FCA of their intention to use the TPR will be contacted and provided with a landing slot when they will need to submit their application for full UK authorisation.

"Upon authorisation, we will generally expect firms to have a physical presence in the UK to help ensure effective supervision. We will be consulting on our approach and expectations shortly.” 

Brexit is expected to happen on October 31 as prime minister Boris Johnson has so far held on to his rhetoric that it will happen 'with or without deal'.

And after a difficult few months there have been encouraging signs this week that a deal may happen after all, as a meeting with the Irish prime minister Leo Varadkar was described as "positive and very promising".