ASIC encourages international firms to review their AFS licensing arrangements ahead of Brexit
The regulator is aware of 298 UK firms operating in Australia and has undertaken a review of potential impacts on licences and exemptions issued.
The Australian Securities & Investments Commission (ASIC) has earlier today posted an update on preparations for Brexit, encouraging firms with global operations to review their AFS licensing arrangements.
ASIC Commissioner Sean Hughes said, “In view of the Brexit date of 29 March 2019, we expect firms to have adequate contingency measures to mitigate the potential implications of Brexit for their operations and importantly, to ensure they have in place appropriate AFS licensing arrangements to provide services in Australia.”
ASIC estimates there are 298 UK firms operating in Australia. The regulator has undertaken a review of potential impacts on licences and exemptions issued.
Of these firms, 285 UK foreign financial services providers (FFSPs) operate in Australia under an Australian financial services (AFS) licensing exemption. In addition, five UK market operators hold an Australian market licence and six operate under exemption notices. One UK firm holds an Australian clearing and settlement facility licence and one UK firm holds an AFS licence.
ASIC is working with the RBA and the BoE to ensure business continuity for systemically important Australian firms operating in the UK.
Furthermore, the ASX Group has notified the BoE that it wishes to enter the UK central counterparty temporary recognition regime and therefore ASIC expects it to continue to be able to provide clearing services in the UK.
ASIC has identified a small number of regulatory actions that will be needed and, as necessary, the regulator plans to complete these steps ahead of the UK’s withdrawal from the EU in a ‘no-deal’ scenario.
The United Kingdom is scheduled to leave the European Union on March 29, 2019.
ASIC is carefully monitoring developments in the UK and has been liaising closely with the UK Financial Conduct Authority (FCA), the Bank of England (BoE), other Australian financial authorities, and its regulated stakeholders to identify and plan for potential Brexit-related impacts. This includes contingency planning in the event that the UK leaves the EU in a ‘no deal’ scenario.
Among other things, ASIC is seeking to enhance its co-operation with UK financial regulators post-Brexit. The FCA will acquire functions and supervisory powers in relation to credit rating agencies, benchmarks and trade repositories, which are currently supervised at the European level by the European Securities and Markets Authority (ESMA). The BoE will acquire functions and powers in relation to non-UK central counterparties, also currently exercised by ESMA.
ASIC and the FCA will enter into new Memorandums of Understanding (MoU) on trade repositories and credit rating agencies and will update our existing MoU on alternative investment funds. ASIC and the BoE will update information sharing arrangements on clearing and settlement facilities.
Existing equivalence decisions granted in respect of Australia by the European Commission (EC) before exit day, will generally be incorporated into UK law and will continue to apply to the UK’s regulatory and supervisory relationship with Australia, post-Brexit.
However, the BoE has confirmed that it will conduct an equivalence assessment of Australia’s regime for central counterparties, notwithstanding equivalence being granted in favour of Australia by the EC under Article 25 of the European Market Infrastructure Regulation (EMIR). ASIC and the Reserve Bank of Australia (RBA) are working together with the BoE on the equivalence assessment.