Financial Market Infrastructure Supervision Agreement between the Bank of England and the Financial Conduct Authority
Bank of England and Financial Conduct Authority Strengthen Cooperation on Financial Market Infrastructure
The Bank of England (BoE) and the Financial Conduct Authority (FCA) have strengthened their cooperation in supervising financial market infrastructure (FMI) through an annual review of a Memorandum of Understanding (MoU). The MoU, last updated in 2024 to reflect changes made by the Financial Services Markets Act (2023), facilitates the exchange of information, coordinated supervision, and policy-making, while minimizing duplication of regulatory activities.
Key benefits of this collaboration were highlighted in the 2024 review. Respondents noted the advantages of a coordinated approach in working on operational resilience, particularly parallel consultations on 'Operational Incident and Third-Party Reporting'. Enhanced efficiency and clarity were achieved by adopting consistent frameworks for regulatory reporting, leading to clearer and more consistent reporting expectations across FMIs.
Feedback from supervised firms affirmed the value of this coordinated supervision, recognizing improvements from the combined oversight of the BoE and FCA. The authorities remain committed to maintaining this coordinated supervisory approach as they plan the publication of a final policy statement in the second half of 2025, which will further clarify and possibly strengthen the cooperation regime.
The successful collaboration across several workstreams over the past 12 months, including the Digital Securities Sandbox (DSS) and T+1 settlement, is evidence of effective coordination. The authorities aim to improve the effectiveness of supervision by addressing any specific areas identified by firms and remain fully supportive of the MoU.
In summary, the BoE and FCA's cooperation on FMI is formalized through an annual reviewed MoU, which promotes efficiency by minimizing duplication of regulatory activities. The main operational benefit of this collaboration is a coordinated operational resilience and supervision, leading to clearer, more consistent reporting frameworks. The authorities will continue to work together to improve operational resilience and supervision, as outlined in their coordinated approach.
| Aspect | Details | |-------------------------------|------------------------------------------------------| | Cooperation framework | Memorandum of Understanding (MoU) | | Frequency of review | Annual review based on supervised firms’ feedback | | Main operational benefit | Coordinated operational resilience and supervision | | Impact on reporting | Clearer, more consistent reporting frameworks | | Next steps | Final policy statement expected in H2 2025 |
This cooperation aligns with the broader regulatory improvements and enforcement framework changes under FSMA 2023 and related regulations, enhancing the BoE's and FCA's supervisory powers and coordination. The authorities recognize the importance of effective planning and coordination between the Bank and the FCA, and will continue to work towards minimizing duplication of regulatory activities regarding financial market infrastructures.
- The coordinated approach between the Bank of England and the Financial Conduct Authority in managing financial market infrastructure has significantly improved operational resilience, as exemplified by the parallel consultations on 'Operational Incident and Third-Party Reporting.'
- In the realm of business and finance, the collaboration between the Bank of England and the Financial Conduct Authority has led to enhanced efficiency and clarity in regulatory reporting, resulting in clearer and more consistent reporting frameworks for financial market infrastructures.
