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FCA – details of final Brexit instruments and TTP directions

FCA – details of final Brexit instruments and TTP directions

Background

  • On 22 December 2020, the FCA published the final onshoring instruments, related guidance and Temporary Transitional Power (TTP) directions that will apply at the end of the Brexit transition period ending on 31 December 2020.
  • https://www.fca.org.uk/news/news-stories/fca-publishes-final-brexit-instruments-ttp-directions
  • The FCA has made further EU exit-related changes to its Handbook and Binding Technical Standards for which, in some cases, it shares responsibility with the Prudential Regulation Authority (PRA) or the Bank of England.
  • These changes ensure that a functioning regulatory and legal framework for financial services continues to be in place after the transition period.

Impacts

This FCA update follows the publication in September of the FCA’s Quarterly Consultation Paper (CP20/18) containing draft onshoring-related instruments.  The final instruments are largely unchanged from CP20/18; the latest changes are outlined in Handbook Notice 83.

https://www.fca.org.uk/publication/handbook/handbook-notice-83.pdf

To help firms adapt to their new or changed regulatory requirements, the Treasury has given UK financial regulators the power to make transitional provisions in relation to financial services legislation for a temporary period.  This is known as the Temporary Transitional Power (TTP).

The updated TTP directions were also published by the FCA on 22 December 2020.  The TTP will be applied on a broad basis from the end of the transition period until 31 March 2022 but there are some areas where the TTP will not apply.

Firms can see which changes will apply to them by reviewing the new FCA Handbook site alongside the updated TTP information.

To avoid any disruption of OTC derivative contracts that are open as at IP completion day, and to allow both fund managers and counterparties time to adjust to the new situation, the FCA is introducing a transitional provision.  Any central counterparty (CCP) or other person that, because of an EU authorisation or recognition, is an approved counterparty on IP completion day will retain that status for two years afterwards.

This extended period means that firms and other regulated persons do not generally need to prepare now to meet the changes to their UK regulatory obligations brought about by onshoring.  Where the TTP applies, the FCA expects firms to use the duration of the TTP period to prepare for full compliance with the onshored UK regime by 31 March 2022.

Timeline with relevant dates to be logged on regulatory calendar

  • Full readiness and compliance required by 31 March 2022

Next steps

All firms must refer for guidance to the FCA website and other regulatory announcements.

If anyone has specific questions or needs any advice, contact our specialists.