08 April 2019

UK Financial Conduct Authority and Australian Securities and Investments Commission agree to strengthen cooperation post-Brexit

The UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) announced they have agreed two Memoranda of Understanding to ensure there is continuity once the UK leaves the EU. The MoUs cover trade repositories and alternative investment funds (AIFs).

These agreements will provide reassurance by ensuring arrangements are in place for cross-border cooperation between the FCA and ASIC. The FCA and ASIC also support the continuity of existing equivalence decisions to provide certainty to businesses post-Brexit.

These MoUs will enter into force on the date EU legislation ceases to have direct effect in the UK. This will occur when the UK leaves the EU, or at the end of the transition period if a Withdrawal Agreement is in place.

A new MoU on trade repositories is required because the FCA will acquire functions and supervisory powers in relation to trade repositories, which are currently supervised at the European level by the European Securities and Markets Authority (ESMA).

The MoU on trade repositories will ensure that ASIC can continue to access data on derivatives contracts held in UK trade repositories, where the information is needed for ASIC to fulfil its responsibilities and mandates. The MoU is established under Article 76(2) of the UK’s onshored European Market Infrastructure Regulation (UK EMIR).  This provision aims at ensuring that third-country authorities such as ASIC, that do not have any trade repository in their jurisdiction, may access the information on derivatives contracts held in UK trade repositories which is relevant for their mandates.

The MoU on AIFs has been updated to reflect the regulatory regime that will apply in relation to AIFs in the UK post-Brexit.  The MoU on AIFs provides a framework for the FCA and ASIC to work together to ensure alternative investment fund managers (AIFMs) and AIFs that operate on a cross-border basis are properly supervised in the UK and Australia. The MoU will cover Australian managers that manage or market AIFs in the UK and UK managers that manage or market AIFs in Australia, as well as their delegates and depositaries. The existence of an MoU between ASIC and the FCA is a precondition of the UK’s AIFM regime, for allowing managers from third countries access to the UK market.

HM Treasury has confirmed that existing equivalence decisions granted in respect of Australia by the European Commission (EC) before exit day, will generally be incorporated into UK law and will continue to apply post-Brexit.  The UK will adopt existing EU equivalence decisions that relate to Australia’s supervisory and regulatory regime for trading venues, OTC derivatives markets and credit rating agencies.

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