The UK Financial Conduct Authority (FCA) is already encountering some resistance from European authorities. The CEO of the watchdog, Andrew Bailey, shared the info with the Financial Times in an interview.
Bailey shares that the European Securities and Markets Authority (ESMA) is engaging in certain discussions which do not include an FCA representative. The talks include information which relates to the future status of the relationship between the UK and the EU.
The UK regulator is also excluded from discussions of sensitive topics such as what the requirements would be for UK firms to provide their services in the EU. ESMA is not shutting the UK regulator out from all talks related to Brexit.
The news mimics the relationship between the Bank of England and its Prudential Regulatory Authority and the European Banking Authority.
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FCA and Great Repeal Bill
The UK government is in the process of crafting the ‘Great Repeal Bill’, which is related to the harmonization of EU law with existing UK regulations. Domestic laws in the UK would get copied and be voted on by Parliament on a case-by-case basis.
According to the FT, the FCA has had to hire 15 extra lawyers to help with the task of rewriting the legislative framework.
The FT’s interview with the leader of the chief financial regulator in the UK shows the risks associated with a rift between the UK and the EU. Should both sides fail to agree on the terms of Brexit, some of the financial industry might face a set of challenges to operating cross-borders.
One front where the FCA and the ESMA are coordinating well is the retail forex and CFDs area. Last week both authorities issued official announcements that are clarifying the regulatory stance in Europe towards certain products.
The FCA decided to postpone the implementation of changes to its regulatory framework for next year, when MiFID II will permit national authorities to implement product intervention powers.