British and EU flags flutter outside the Houses of Parliament in London, Britain January 30, 2019. REUTERS/Toby Melville
LONDON (Reuters) – The European Union’s markets watchdog said it has approved an agreement on supervisory cooperation with Britain after Brexit to avoid disruption to cross-border financial services like asset management.
“The board agreed in substance the Memorandum of Understanding and will provide more detail shortly,” a spokesman for the European Securities and Markets Authority (ESMA) said on Thursday.
The MoU was negotiated with Britain’s Financial Conduct Authority (FCA) to ensure that regulators in the bloc and London agree to exchange information on financial firms that have cross-border business.
Britain is due to leave the EU on March 29 and an MoU is a standard feature of supervisory relations between the bloc and non-EU countries.
An MoU is critical for the funds industry, particularly as Britain could crash out of the bloc in two months’ time unless it comes up with an agreed divorce settlement with Brussels.
Without an MoU there could be no “delegation”, or asset managers in Britain making investment picks for funds listed in Dublin, Luxembourg or elsewhere in the EU.
“The ESMA board agreed in substance the MoU and we will provide more detail shortly,” an FCA spokesman said.
While ESMA negotiated the MoU, it has to be signed by regulators from each of the remaining 27 EU states.
“Firms that delegate portfolio management to the UK can have sufficient confidence that this will continue to be allowed post 29th March,” said Ed Sibley, deputy governor of the Central Bank of Ireland said earlier this month.
Reporting by Huw Jones, Editing by Lawrence White and Catherine Evans