On 7 October 2019, the FCA published their Market Watch issue 61 which was released in preparation for a no-deal Brexit scenario which may occur on 31 October 2019. The edition is aimed towards providing firms with information to ensure that they are both better equipped to handle and are aware of the possible implications a no-deal Brexit.

Brexit planning

The FCA highlight the fact that they have continued to update their website to include more information about how different firms could be affected by Brexit, setting out considerations for UK firms and EEA firms conducting business in the UK.

The market watch newsletter also makes reference to the speech given by Andrew Bailey on 16 September 2019. Bailey identified that although progress had been made in the financial sector in preparation of a no-deal Brexit, there were a number of issues which remained at both a UK and EU level. These issues are the Share Trading Obligation, the Derivatives Trading Obligation, clearing, uncleared derivatives, data exchange, progress on contract repapering and retail financial services preparation. The Market Watch newsletter warns firms to consider these issues as “part of their contingency planning”.

Brexit and MiFID transaction reporting

The newsletter also confirms the approach of the FCA to “minimise disruption” in the event of a no-deal Brexit through the extension of the proposed duration of time firms would be required to comply with any regulatory changes needed to be implemented due to ‘onshored’ EU legislation, to the 31 December 2020, provided that the UK leaves the EU without a withdrawal agreement. The FCA has also released updates regarding their intended use of the Temporary Transitional Power (TTP), their responses to Brexit consultations as well as “near-final rules” and Binding Technical Standards (BTS).

The newsletter draws specific attention to the transaction reporting rules under MiFID II, highlighting the fact that should the UK leave the EU without a deal, firms not in a position to fully comply with the MiFID transaction reporting regime on the date of Brexit, will be required to back-report “missing, incomplete or inaccurate transaction reports as soon as possible”.

Operation of the MiFID Transparency Regime post-exit

The Market Watch directs readers to an update published by the FCA regarding the Operation of the MiFID Transparency Regime post-Brexit, taking into account ESMA’s recent statement on the matter. ESMA announced updated measures with regards to the use of UK data in ESMA databases and the impact of no-deal Brexit on MiFID II/ MiFIR and the Benchmark Regulation C(6) carve-out.

In a final note, the newsletter also states that industry testing for the FCA Financial Instruments Transparency System (FITRS) will open on 10 October.