In a concerted effort to fortify the supervision of financial market infrastructure (FMI) and payment systems, the Bank of England (Bank) collaborates seamlessly with the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR). The regulatory framework is cemented through two Memoranda of Understanding (MoUs), facilitating the exchange of crucial information and mitigating redundancy in regulatory activities.
Reviewing Effectiveness through Annual MoU Assessment
The regulatory authorities conduct an annual review of the MoUs to ensure their effectiveness. This process involves gathering feedback from supervised firms, specifically seeking insights on the efficiency of the proposed cooperation. Notably, the objective is to enhance supervisory processes and policymaking by fostering an environment of shared information.
Insights from FMI Consultation and Coordinated Efforts
In a recent consultation with Financial Market Infrastructures (FMIs) such as Central Counterparties (CCPs), Recognised Investment Exchanges (RIEs), and Central Securities Depositories (CSDs), the Bank and FCA received constructive feedback. FMIs stressed the importance of effective coordination, with positive remarks on engagement during significant market disruptions in 2022, including geopolitical events.
While the overall feedback was affirmative, some FMIs highlighted instances where a more consistent approach in material review could have minimized delays. Operational resilience emerged as a focal point, showcasing effective cooperation, albeit with room for improved coordination to alleviate regulatory burden.
Commitment to Ongoing Cooperation and Adaptation to Regulatory Changes
Conclusively, the Bank and FCA affirmed the effectiveness of the MoU arrangements for cooperation. Acknowledging strong coordination and the avoidance of material duplication, the authorities commit to ongoing enhancement based on specific feedback from firms. The MoU has undergone minor updates to align with regulatory changes, including the UK’s withdrawal from the European Union.
As the financial landscape evolves, the Bank and FCA remain devoted to domestic and international cooperation. Close collaboration on emerging priorities, such as the Financial Services Markets Act 2023 (FSMA), and adherence to international standards on operational resilience are pivotal. The commitment extends to keeping the MoU under continual review to ensure its effectiveness in tandem with the evolving regulatory landscape.
Read more: https://fintechfrontiers.live/rbi-and-bank-of-england-sign-mou-on-clearing-corporation-cooperation/
