We have published a direction clarifying how an EEA market operator may make an application to become a recognised overseas investment exchange (ROIE) (PDF), to enable the participation of the exchange in UK markets, should they no longer be able to rely on MiFID II passport rights once the UK leaves the EU. Overseas investment exchanges which do not carry on regulated activities in the United Kingdom need take no action.
We continue to prepare for a range of scenarios, including one in which the UK leaves the EU without a deal and without entering an implementation period.
EEA market operators (as defined by MiFID II) who operate a regulated market, a multilateral trading facility (MTF) or an organised trading facility (OTF) currently rely on MiFID II passport rights to enable members based in the UK access to their markets, where they engage in regulated activities to do so.
What will change after Brexit
Once the UK has left the EU, passport rights will no longer apply to MiFID II EEA market operators seeking to facilitate the participation of the exchange in UK markets.
The Treasury is not planning to put in place a temporary recognition regime for EEA market operators in the event the UK leaves the EU without a deal and without entering an implementation period.
EEA market operators who currently make use of passport rights may therefore wish to apply to be recognised as a ROIE.
EEA market operators which do not maintain a permanent place of business in the UK may be able to rely on the overseas persons exclusion following the UK’s withdrawal from the EU, to the extent that they would otherwise be deemed to be carrying on a regulated activity in the UK.
However, EEA market operators who cannot rely on the overseas persons exclusion and who undertake regulated activities in the UK should seek appropriate FCA permissions such as recognition as a Recognised Overseas Investment Exchange. Market operators should seek their own advice on the application of the UK regulatory framework to their circumstances.
The direction clarifies our expectations of EEA market operators. We have streamlined the application requirements where possible, considering that EEA market operators are subject to the MiFID II/MiFIR regime. Supervisory cooperation will remain a key element of the ROIE regime.
How to make an application
The direction sets out the way an application must be made, for us to assess whether the recognition requirements have been met.
Market operators should contact ROIE@fca.org.uk as soon as possible to make us aware of their plans in relation to any arrangements they intend to maintain in the UK. Please also contact ROIE@fca.org.uk as soon as possible if you are considering making an application.
Complete applications should be received as soon as possible. As we explain in our Handbook, applications should be made not later than 6 months before the applicant wishes a ROIE recognition order to take effect.
The application should be accompanied by the fee, as set out in the direction, to be considered complete.