Compliance
Compliance Corner: FCA, ESMA
The latest compliance issues in wealth management across Europe, Middle East and Africa.
Financial Conduct Authority
The Financial
Conduct Authority is consulting the financial services sector
on how it should handle Brexit if legislators in London refuse to
endorse the government’s draft leave package.
The financial watchdog said its paper sets out “additional
proposals to prepare for the possibility the UK leaves the
European Union on 29 March 2019 without an implementation period”
– in other words, no deal. At the weekend, UK Prime Minister
Theresa May’s plans were endorsed by European Union heads of
state. The House of Commons is due to vote on the plan on 12
December, and many commentators say there is a high chance the
package will not be approved.
“The FCA is working to ensure as smooth a transition as possible
as the UK prepares to leave the European Union. Earlier this
year, we set out the FCA’s role in preparing for Brexit. This
consultation, along with those published in October, is an
important part of this work,” the FCA said.
The FCA said it is not proposing any policy changes unrelated to
Brexit in the consultation paper.
European Securities and Markets Authority
The
European Securities and Markets Authority, aka ESMA, late
last week said that it welcomed a European Union statement and it
will address risks to financial stability if the UK leaves the
bloc without a withdrawal agreement.
Financial practitioners, investors and certain political
commentators fear that if the UK leaves the bloc without a formal
deal – as could happen if UK Prime Minister Theresa May’s plan is
rejected by the House of Commons next month – markets could be in
turmoil. The EU on 13 November set out how it will act if such a
withdrawal takes place. “In such a scenario, the EC [European
Commissioin] has stated that it will adopt a temporary and
conditional equivalence decision in order to ensure that there
will be no disruption to central clearing,” ESMA said.
“Therefore, ESMA is engaging with the EC to plan, as far as
possible, the preparatory actions for the recognition process of
UK CCPs [central counterparties] in case of a no-deal scenario.
ESMA has already started engaging with UK CCPs to carry out
preparatory work. The aim is to ensure continued access to UK
CCPs for EU clearing members and trading venues as of 30 March
2019, should all the conditions in EMIR, including any conditions
set out in the equivalence decision, be fulfilled,” ESMA said.
