On 7 October 2019, the FCA published the latest issue of Market Watch (no. 61), its newsletter on market conduct and transaction reporting issues.

In this issue of Market Watch, the FCA provides information to help firms prepare for a possible no-deal Brexit on 31 October 2019. Firms requiring guidance on Brexit-related issues should look to the FCA webpage on Brexit, and should consider the outstanding issues highlighted in the FCA’s Chief Executive’s speech given in September 2019 (see previous blog here).

The FCA also explains the measures taken to minimise disruption for firms in the event of a no-deal Brexit through its temporary transitional power, which gives firms time to adapt to the new regulatory environment resulting from Brexit. However, the FCA notes that the temporary transitional power is not appropriate in all areas, namely transaction reporting rules under MiFID II. Firms and connected persons, for example Approved Reporting Mechanisms, should take reasonable steps to comply with the changes to their regulatory obligations by exit day on 31 October 2019.

On a related webpage, the FCA has provided an update explaining how the MiFID transparency regime will work if the UK leaves the EU on 31 October at 11pm 2019 without a withdrawal agreement. The FCA has also updated its Supervisory Statement on the Operation of the MiFID Transparency Regime post-Brexit which underpins its approach to operating the MiFID transparency regime in a no-deal scenario. The statement covers changes mainly to dates, and much of the original statement published on 14 March 2019 remains relevant.

The webpage covers:

  • the financial instruments transparency system (FITRS). In addition to equities and bonds, the FITRS will include equity, interest rate, FX, securitisation and commodity derivatives from 1 November 2019;
  • the Double Volume Cap (DVC). After the UK’s exit from the EU, the FCA expects to publish details of any new DVC suspensions, if applicable, for the first time on 8 January 2020. Any such suspensions will take effect from 13 January 2020;
  • equity and non-equity transparency;
  • systematic internalisers; and
  • tick sizes.

As part of the development of a post-exit MiFID regime, industry testing for the FCA’s FITRS will open on 10 October 2019.