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The Securities And Exchange Commission And The UK Financial Conduct Authority Sign Updated Supervisory Cooperation Arrangements

Date 29/03/2019

The Securities and Exchange Commission and the United Kingdom (UK) Financial Conduct Authority (FCA) have today reaffirmed their commitment to continue close cooperation and information sharing in the event of the UK’s withdrawal from the European Union (EU).

As evidence of their long-standing partnership, SEC Chairman Jay Clayton met with FCA CEO Andrew Bailey and signed two updated Memoranda of Understanding (MOUs) to ensure the continued ability to cooperate and consult with each other regarding the effective and efficient oversight of regulated entities across national borders.  At the meeting in London, Chairman Clayton and Andrew Bailey also discussed risks posed by jurisdictional share trading obligations, which could increase market fragmentation and impose unnecessary costs on investors. 

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.”

FCA CEO 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.”

The first MOU, originally signed in 2006, is a comprehensive supervisory arrangement covering regulated entities that operate across the national borders.  The MOU was updated to, among other things, expand the scope of covered firms under the MOU to include firms that conduct derivatives, credit rating and derivatives trade repository businesses to reflect (i) post-financial crisis reforms related to derivatives and (ii) the FCA’s assumption of responsibility from the European Securities and Markets Authority for overseeing credit rating agencies and trade repositories in the event of the UK’s withdrawal from the EU.

The second MOU, which is required under the UK Alternative Investment Fund Managers Regulations, was originally signed in 2013.  The MOU provides a framework for supervisory cooperation and exchange of information relating to the supervision of covered entities in the alternative investment fund industry. The updated MOU ensures that investment advisers, fund managers, private funds and other covered entities in the alternative investment fund industry that are regulated by the SEC and the FCA will be able to continue to operate on a cross-border basis without interruption, regardless of the outcome of the UK’s withdrawal from the EU.

These MOUs will come into force on the date EU legislation ceases to have direct effect in the United Kingdom.