FCA is consulting on its approach to the authorization and supervision of international firms operating in UK. The consultation paper CP20/20 sets out the general approach of FCA to international firms providing or seeking to provide financial services that require authorization in UK. The comment period for this consultation expires on November 27, 2020.
FCA expects that there will be an increase in the number of international firms seeking authorization at the end of the Brexit transition period, with over 1,500 firms currently registered in the Temporary Permissions Regime. CP20/20 and the final document FCA expects to publish after consultation are intended to provide guidance to help international firms understand the expectations of FCA, as they prepare for their applications for full UK authorization. This could help inform firms’ decision about how they might want to structure their businesses to provide regulated financial services in UK.
This consultation applies to international firms that require authorization, including:
- European Economic Area firms that have applied for authorization in the UK, or intend to seek authorization in the future, including those which have notified (or intend to notify) for the Temporary Permissions Regime
- International firms from non-EEA countries that have applied or intend to apply for authorization in the UK, or are already authorized in the UK
For regulated activities that require a permission under Part 4A of the Financial Services and Markets Act 2000, depending on the activities an international firm performs, it will either be solo-regulated by FCA or dual-regulated by FCA and PRA. FCA authorizes solo-regulated firms while PRA is the lead authority for authorization in the case of dual-regulated firms, though FCA must also provide its consent. PRA has already published details of its approach to the authorization and supervision of branches of international banks and international insurers. To give consent, FCA will assess these firms against its own threshold conditions for dual-regulated firms, taking account of its statutory objectives. FCA's threshold conditions for dual-regulated firms are different to its threshold conditions for solo-regulated firms. The focus of FCA assessment is also somewhat different to that of the PRA assessment. Therefore, dual-regulated international firms will wish to consider the issues raised in CP20/20 and the extent to which their structures and the scope of their operations could present the risks identified in this consultation paper.
Comment Due Date: November 27, 2020
Keywords: Europe, EU, UK, Banking, Insurance, Securities, Brexit, CP20/20, Temporary Permissions Regime, FSMA, Authorization Regime, FCA
Previous ArticleEBA Publishes Single Rulebook Q&A Updates in September 2020
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.