Update to the Bank of England and Financial Conduct Authority’s memorandum of understanding on the oversight of market infrastructure and payment systems

The bank works closely with the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) to oversee the Financial Markets Infrastructure (FMI) and payment systems respectively and to help ensure the stability and integrity of the UK financial markets. The framework for working with these authorities is set out in two Memorandums of Understanding (MoUs) to support effective oversight and policy making through the exchange of information between regulators and to promote efficiency by minimizing the duplication of work by regulators in relation to these entities becomes.

The signatories to the framework agreements are required to review the memoranda of understanding annually to assess whether the arrangements set out in the memorandum of understanding are proving effective. As part of the review process, the authorities also collect annual feedback from the supervised firms on whether the intended collaboration is working effectively. The Bank and the FCA consulted market infrastructures such as Central Counterparties (CCPs) and Recognized Investment Exchanges (RIEs) and reviewed their cooperation in relation to these entities. The authorities concluded that the MoU’s cooperation arrangements would remain effective with appropriate coordination and without significant duplication. Industry respondents recognized the efforts made to work together, particularly in relation to the LIBOR transition and operational resilience, and the Bank and FCA remain committed to working together effectively going forward.

The Bank and FCA will continue to deepen collaboration by collaborating on joint reviews where possible, including conducting Joint Cybersecurity Reviews (CBEST), seeking to complement each other’s objectives and avoid duplication of information gathering. The Bank and FCA have worked closely together during recent market volatility, including during the period of volatility resulting from the Russia-Ukraine crisis. Authorities reiterated their commitment to work together at home and abroad to ensure sound legislation that reflects awareness of each other’s goals.