Bank Of England And UK Financial Conduct Authority – Memorandum Of Understanding On The Supervision Of Financial Market Infrastructures - Joint Statement From The Bank Of England And Financial Conduct Authority

The Bank of England (Bank) co-operates with the Financial Conduct Authority (FCA) (‘The Authorities’), to supervise financial market infrastructure (FMI).

A memorandum of understanding (MoU)^footnote[1] facilitates effective supervision and policy making by the authorities. The MoU allows for the exchange of information between the authorities and promotes efficiency by minimising duplication of regulatory activities regarding FMIs. The MoU must be reviewed annually^footnote[2] to ensure it is proving effective. This involves requesting feedback from supervised FMIs on whether the proposed co-operation is working effectively.

The Bank and FCA held a consultation with FMIs: Central Counterparties (CCPs), Recognised Investment Exchanges (RIEs) and Recognised Central Securities Depositories (RCSDs) based on these firms’ interaction in 2023.

Respondents agreed that the arrangements of the MoU are proving to be effective and emphasised the importance of close and effective coordination between the authorities. They acknowledged the efforts made on coordination and agree that the Bank and FCA remain committed to effective co-operation. One noted feedback submitted last year had been acted upon. Respondents also highlighted increased communication and coordination between the respective supervisory teams relating to topics such as operational resilience.

The Bank and FCA agree that the arrangements of the MoU regarding co-operation continue to be effective with appropriate coordination and no material duplication between them. The Bank and FCA will seek to address any specific areas identified by firms, including the need for collaboration in relation to new rulemaking powers.

The MoU will be updated in 2024 to reflect changes related to the Financial Services Markets Act (2023), as well as new areas requiring coordination, including regulatory sandboxes, in which innovations can be safely tested, and policy initiatives.

The Bank and FCA are also agreeing a separate MoU setting out how they intend to co-operate with each other in relation to the operation and supervision of the Digital Securities Sandbox (DSS). This DSS MoU will be published before supervision in the DSS commences.