The UK Financial Conduct Authority and the US Securities and Exchange Commission sign updated supervisory cooperation arrangements

As evidence of their long-standing partnership, Andrew Bailey, FCA CEO met with Jay Clayton, SEC Chairman 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.

Andrew Bailey, Chief Executive of the FCA, 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.”

Jay Clayton, Chairman of the SEC, 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.”

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.

Notes to editors

1. Find out more information from the FCA about preparing for Brexit[1]
2. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
3. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has 3 operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
4. Find out more information about the FCA[2].