The UK’s Financial Conduct Authority (FCA) and US Securities and Exchange Commission (SEC) have signed two memoranda of understandings (MoU) to reaffirm cooperation following Brexit.
These agreements will cement the two countries cooperation, consultation and information sharing following the UK’s withdrawal from the EU, to ensure efficient oversight of regulated entities across borders.
During their meeting, they also discussed the risks presented by jurisdictional share trading obligations, which could see increased market fragmentation and increase costs on investors.
The first MoU which originally signed in the EU in 2006 and represents a comprehensive supervisory agreement over regulated entities operating across national borders. It was updated to expand the reach of covered firms, to include those which conduct derivatives, credit rating and derivatives trade repository businesses.
This will support post-financial crisis reforms related to derivatives and the FCA’s responsibilities it is taking from the European Securities and Markets Authority regarding the overseeing of credit rating agencies and trade repositories.
The second MoU is required under the UK Alternative Investment Fund Managers Regulations and was originally signed in 2013. Under this agreement, the bodies will continue to cooperate, and exchange information related to the supervision of covered entities in the investment fund industry.
It was updated to ensure SEC and FCA regulated investment advisers, fund managers, private funds and other related entities in the alternative investment fund industry can continue to operate on a cross-border basis without interruption, following Brexit.
FCA chief executive Andrew Bailey said, “As part of our preparations for Brexit we have been working with our partners in the EU and globally to ensure there is minimal disruption. These MoUs will ensure the UK can continue to be a key market for funds and fund managers. Today’s amendments will ensure continuity and stability for consumers and investors in the UK and US.”
These MoUs will enter into effect on the date the EU legislation ceases to have direct effect on the UK.
SEC chairman Jay Clayton said, “The SEC and the FCA have a long history of effective cooperation on supervisory and other matters. The amended MOUs we entered into today reaffirm this commitment and collaboration with respect to the oversight of our respective registrants for the benefit of each of our markets and investors.”
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