The FCA has published an updated version of the FCA Handbook to show the rules that will apply at the end of the transition period. It has also set out details on how it intends to use the Temporary Transitional Power (TTP).
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 firms and other regulated persons can continue to comply with their existing requirements for a limited period.
The FCA intends to apply the TTP on a broad basis from the end of the transition period until 31 March 2022. This means firms and other regulated persons do not generally need to prepare now to meet the changes to their UK regulatory obligations brought about by onshoring.
There are areas where it would not be appropriate for the FCA to grant relief at the end of the transition period, including where doing so would not be consistent with its statutory objectives. By reviewing the new Handbook site, alongside the updated TTP information, firms will be able to see which changes will apply to them.
In some key areas, the FCA expects firms and other regulated persons to be preparing to comply with changed obligations ready for 31 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
- Electronic commerce EEA firms
- Mortgage lending after the transition period against land in the EEA
- Payment Services – strong customer authentication and secure communication
Nausicaa Delfas, Executive Director of International at the Financial Conduct Authority, 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 (TTP). 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 31 December 2020.’
The FCA expects firms to use the duration of the TTP to prepare for full compliance with changes to UK regulatory obligations by 31 March 2022.