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FCA publishes MiFID II guidelines for Hard Brexit

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The FCA has published their expectations for firms, trading venues and ARMs under the MiFID II Transaction Reporting regime, in the event of a hard Brexit.

Four points to take note of:

  1. FCA FIRDS will replace ESMA FIRDS, this will be fed with live production data from early March, with the goal of being fully operational by the end of March. Test access will be available to connected firms and authorised ARMs from 21 February 2019. Interestingly, FCA FIRDS will use Amazon’s elastic search engine, which should yield better results than the existing ESMA form-based search capability.
  2. Should a hard-Brexit occur on Friday 29 March 2019, there will be an immediate switch-over to UK FIRDS on the subsequent weekend, with the aim of being live on 1 April 2019. Should an implementation period be agreed, then it is more likely that a phased migration to UK FIRDS will occur.
  3. UK trading venues will need to prepare to transaction report for transactions on their venues by their EEA members (who are not operating through a UK branch), who report to their home state within the EEA and who will become 3rd country firms as regards the UK after 29 March 2019.
  4. EEA firms, who operate through a UK branch, will now need to prepare to submit transaction reports to the UK, either by directly authorising with the FCA MDP, or by contracting with an ARM that is authorised to do so. This may involve changing ARM, if the ARM has not elected to participate in the FCA’s temporary authorisation regime.

While the prospect of a hard Brexit is daunting for EEA firms operating a UK branch, the FCA has stated that no enforcement will be taken against firms who are not immediately compliant with the new requirements. Naturally, all impacted firms must demonstrate that reasonable steps have been taken to prepare to meet the new obligations by 29 March 2019.

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