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UK-EU Memoranda of Understanding to come into force on 1 January 2021

  • United Kingdom
  • Brexit
  • Financial services and markets regulation
  • Financial services



From 1 January 2021 there will be memoranda of understanding (“MoUs”) in place between the UK’s Financial Conduct Authority (“FCA”), the European Securities and Markets Authority (“ESMA”) and the EU/EEA National Competent Authorities (“NCAs”), which will permit, amongst other things, delegation of discretionary investment management, to continue.


On 1 February 2019, ESMA and the EU/EEA NCAs agreed MoUs with the FCA.  The aim of this agreement was to mitigate the impact of the UK leaving the EU without any withdrawal agreement or “no-deal Brexit” in the financial services sector.

The MoUs covered cooperation and exchange of information provisions and included:

  1. An MoU between ESMA and the FCA on exchange of information in respect to the supervision of Credit Rating Agencies (“CRAs”) and Trade Repositories (“TRs”); and

  2. A multilateral MoU with the EU/EEA NCAs covering supervisory cooperation and enforcement and information exchange, to allow information sharing in the area of market surveillance, investment services and asset management activities.

These MoUs form part of the necessary regulatory framework to support the cross-border delegation of the management of funds and cross-border clearing in accordance with Art 20 AIFM directive and Art 13 UCITS directive. 

However, on the Withdrawal Agreement coming into force on 1 February 2020 and the UK entering the transitional period during which EU law continues to apply in and to the UK, these MoUs did not take effect.

MoUs remain valid

On 17 July 2020, ESMA and the FCA (“FCA confirms MoUs with ESMA and EU securities regulators”) announced that the MoUs remain valid and will take effect at the end of the transitional period expiring on 31 December 2020 (the deadline for extending the transitional period passed on 30 June 2020).  ESMA and the FCA confirmed that these MoUs remain relevant and appropriate to ensure continued good cooperation as well as avoid disruptions in relation to delegation of investment management and the operation of CRAs and TRs.  

Delegation of portfolio management

Exchange of information between the FCA and the EU/EEA NCAs is a legal requirement for the continuation of delegation.  As the multilateral MoU permit this, asset management firms can take comfort that they can continue to delegate certain core functions across the UK/EU27 border after 31 December 2020.  From a practical point of view, this means that the current operating models can remain in place.  This position was confirmed by the European Commission in its 7 July 2020 Notice to Stakeholders regarding asset management.  

Post 31 December 2020

The MoUs will apply post 31 December 2020 regardless of the outcome of the current UK-EU trade negotiations bringing welcome certainty to the financial services industry. 

Our Brexit tracker

Our European Brexit tracker provides a quick overview of the current position in relation to UK funds and UK fund managers seeking to sell services into EU27 countries after Brexit.

How Eversheds Sutherland can help

If you need help assessing how Brexit may affect your firm, we are able to help. Since June 2016, our lawyers and consultants have advised various institutions passporting into the UK from EU27 Member States and passporting from the UK into the EU27 on Brexit planning and Brexit related issues. We would be happy to discuss how we can help you with your Brexit planning and execution of those plans.

To see our client briefings on the wide range of implications of Brexit, visit our Brexit hub.