UK''s Financial Conduct Authority: Registering As A Credit Rating Agency Post Brexit

Wednesday, October 10, 2018 05:12PM / FCA

When the UK leaves the EU, the FCA willbecome the UK regulator of credit rating agencies.

We continueto prepare for a range of scenarios, including one in which the UK leavesthe EU without a deal and without entering an implementation period.

The Treasury has announced its proposed approach to amending retained EU law related to creditrating agencies(link is external) (CRAs),to be laid under the EU (Withdrawal) Act.

The draft SI will transfer UK regulationof CRAs from the European Securities and Markets Authority (ESMA) to theFCA and make amendments to retained EU law to ensure that it continues tooperate effectively in the UK once the UK leaves the EU. It is not intended tomake policy changes, other than where appropriate to reflect the UK’s newposition outside the EU.

Getting Registered

To support a smooth transition to the newregime for CRAs in the UK, and minimise disruption to the users of creditratings, the draft SI will include 2 registration regimes for firms:

A conversion regime. This will allow CRAs established in the UK before exit day to convert their ESMA registration into registration with the FCA. CRAs certified with ESMA will also be able to extend their certification to the UK.
A temporary registration regime. This will offer temporary registration to CRAs that apply for registration with the FCA before exit day, provided that they are a UK legal entity and are part of the same group as a CRA with an existing ESMA registration. This will allow time for us to assess these applications. This regime is distinct from the Temporary Permission Regime for inbound passporting EEA firms and funds.

For firms not falling into the abovecategories, applications to register as a CRA will be assessed in accordancewith the usual procedures in the CRA Regulation.

We will consult on the fees that CRAswill have to pay in Q4 2018.

Next Steps

CRAs should let us know if they intend tooffer services to UK markets from exit day.

Email: [email protected]

The Treasury intends to publish the draftSI in due course and lay the SI before Parliament in the Autumn. If, asexpected, the UK enters an implementation period after Brexit, the changes madein the SI will not take effect on 29 March 2019.

We are consultingon updating our Binding Technical Standards to reflect the changesthat will be introduced through the SI.

Indicative Timeline

Date	Activity
9 October 2018	FCA consultation on applicable technical standards for CRAs
Q3 2018	Draft SI published
Q4 2018	FCA fees consultation
Q4 2018	SI laid before Parliament
Q4 2018	FCA to offer pre-application support
Early 2019	Application window opens
29 March 2019	Responsibility for the regulation of CRAs in the UK transfers to the FCA