Brexit – Temporary authorisation regime for data reporting services providers (DRSPs)

The Treasury's Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018 SI (MIFI EU Exit Regs), as amended by the Financial Services (Consequential Amendments) Regulations 2020, makes provision for temporary authorisations for MIFID authorised EEA DRSPs to provide a data reporting service in the UK for a limited period after the end of the transition period.

The current situation

MiFID II allows DRSPs established and authorised under MiFID in an EEA member state to provide data reporting services in the UK based on its home member state authorisation.

The EU withdrawal transition period

During the transition period, a EEA DRSP authorised under MIFID can continue to provide a data reporting service in the UK based on its home member state authorisation.

What will change after the end of the transition period

EEA DRSPs authorised under MiFID will no longer be able to provide a service in the UK without authorisation from us.

The temporary authorisation regime will allow EEA DRSPs authorised under MiFID to provide a data reporting service in the UK for a limited period after the end of the transition period while enabling them to seek authorisation in the UK, on a permanent basis.

How the regime will work

EEA DRSPs authorised under MiFID currently operating in the UK, or EEA DRSPs authorised under MiFID seeking to operate in the UK for the first time, will need to let us know 30 working days before the end of the transition period that they intend to provide a service to operate in the UK after Brexit.

This temporary authorisation regime will last for up to 1 year from the end of the transition period. We expect EEA DRSPs in the regime to follow the requirements in the Data Reporting Services Regulations 2017 (DRS Regs) and relevant provisions of the FCA Handbook.

Connectivity to the FCA

EEA DRSPs authorised under MiFID providing a data reporting service in the UK that requires connecting to our system for the first time under the temporary authorisation regime, will need to on-board to our Market Data Processor (MDP) system and pay the applicable fee.

MDP conformance testing can take between 6 and 8 weeks subject to an entity’s onboarding requirements. Read our information on our MDP on-boarding process. Any questions in relation to the MDP on-boarding process should be sent to [email protected].

EEA DRSPs authorised under MiFID that have on-boarded to our MDP system currently providing one data reporting service in the UK, will need to conformance test if they are going to provide an additional data reporting service and submit a new market data type. For example, this would include an EEA DRSP that is providing the service of an approved reporting mechanism (ARM), and now wishes to provide the service of an approved publication arrangement (APA), where it is authorised to do so by its home state regulator.

The notification process

The DRS Regs, amended by the MiFID EU Exit Regs, provides that an entity established and authorised under MiFID to provide date reporting services (or verified as able to do so under article 59.2 MiFID) in an EEA member state can notify us that it wishes to provide a data reporting service in the UK from the end of the transition period. An entity may notify us if it is likely to be authorised as a DRSP under MiFID (or permitted to provide a DRS under article 59.2 MiFID) before the end of the transition period but not before the deadline for notification has passed.

If an entity notifies us under Regulation 12A of the DRS Regs and we determine that the notification is valid, it will be deemed as authorised for up to 1 year after the end of the transition period while enabling it to seek authorisation in the UK, on a permanent basis.

You may submit a complete application for full authorisation in the UK, or, submit the deemed authorisation notification form. We will decide within 28 days if your notification is valid. If you apply for full authorisation, we will determine your application within six months of receiving the completed application.

You must notify us no later than 30 working days before the end of the transition period. If you do not notify us by this date you will not be able to provide a data reporting service within the deemed authorisation regime, and at the end of the transition period you will have to be authorised under the DRS Regs to provide a data reporting service in the UK.

Supervisory notification obligations of entities deemed to be authorised under the DRS Reg to us

We expect you to follow the requirements in the DRS Reg and relevant provisions of the FCA Handbook, including:

• MAR 9 Annex 6 - to notify us of any change to the membership of the management body before such change takes effect, or where this is not possible, within 10 working days after the change.
• MAR 9 Annex 5 - notification of material change in information provided at the time of deemed authorisation
• MAR 9 Annex 9 - ad hoc notifications to include breaches in physical and electronic security measures and service interruptions or connection disruptions and, in the case of ARMs, errors or omissions in the transaction reports caused by the ARM.

Access the notification forms

Fees

In addition to the fee for onboarding to our Market Data Processor (MDP) system, EEA DRSPs in the temporary authorisation regime will be required to pay periodic fees on the same basis as UK authorised DRSPs. On 23 November 2018, we published CP18/36 ​​​​​​which includes the changes to the fees requirements. On 28 February 2019, we published PS19/5 which includes feedback on CP18/36.

While there will be no fee associated with the notification to join the temporary authorisation regime, the authorisation fees for EEA DRSPs that apply for full authorisation, will be based on those for UK applicants for authorisation.