City watchdog publishes post-Brexit transition guide

The Financial Conduct Authority has published an updated set of rules that will apply at the end of the transition period, including details of how it intends to use its Temporary Transitional Power. The TTP gives the FCA flexibility as to how and when changes to its rules apply following the end of the transition period, allowing firms to transition to the new regime. Where it applies, the TTP means that regulated entities can continue to comply with their existing requirements for a limited period.

The watchdog intends to apply the TTP "on a broad basis" from the end of the transition period until 31st March 2022, giving firms extra time to prepare for the changes to their UK regulatory obligations brought about by onshoring.

In some key areas, the FCA expects firms and other regulated persons to be preparing to comply with changed obligations ready for 31st December 2020:

MIFID II transaction reporting
EMIR reporting obligations
SFTR reporting obligations
Certain requirements under MAR
Issuer rules
Contractual recognition of bail-in
Client Assets Sourcebook requirements (CASS)
Market-making exemption under the Short Selling Regulation
Use of credit ratings for regulatory purposes
Securitisation
Electronic commerce EEA firms
Mortgage lending after the transition period against land in the EEA
Payment Services – strong customer authentication and secure communication

The FCA's executive director of international, Nausicaa Delfas, said: "We are approaching the end of the transition period, so firms should be completing their final preparations. To help firms to prepare and provide clarity, we have published a version of our Handbook that will apply from the end of this year, which includes the changes made through the onshoring process.

"We have also set out further details on the Temporary Transitional Power. The power will in most cases give firms more time to adapt to their new obligations. There are some areas where it would not be appropriate for us to apply the TTP, including where doing so could run counter to our objectives: in those key areas, we continue to expect firms and other regulated entities to prepare now to comply with the changes to their regulatory obligations by 31st December 2020."

By reviewing the new Handbook site, alongside the updated TTP information, firms will be able to see which changes will apply to them. The FCA expects firms to use the duration of the TTP to prepare for full compliance with changes to UK regulatory obligations by 31st March 2022.

The Handbook is available here: https://www.handbook.fca.org.uk/

A guide to the handbook for post-Brexit transition is available here: https://www.handbook.fca.org.uk/file/Handbook-Navigational-Guide_Sept-20.pdf

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