UK''s Financial Conduct Authority: Registering As A Credit Rating Agency Post Brexit

Wednesday, October 10, 2018   05:12PM  / FCA

When the UK leaves the EU, the FCA will become the UK regulator of credit rating agencies.

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.

The Treasury has announced its proposed approach to amending retained EU law related to credit rating agencies(link is external) (CRAs), to be laid under the EU (Withdrawal) Act.

The draft SI will transfer UK regulation of CRAs from the European Securities and Markets Authority (ESMA) to the FCA and make amendments to retained EU law to ensure that it continues to operate effectively in the UK once the UK leaves the EU. It is not intended to make policy changes, other than where appropriate to reflect the UK’s new position outside the EU. 

Getting Registered 

To support a smooth transition to the new regime for CRAs in the UK, and minimise disruption to the users of credit ratings, the draft SI will include 2 registration regimes for firms: 

• A conversion regime. This will allow CRAs established in the UK before exit day to convert their ESMA registration into registration with the FCA. CRAs certified with ESMA will also be able to extend their certification to the UK. 
• A temporary registration regime. This will offer temporary registration to CRAs that apply for registration with the FCA before exit day, provided that they are a UK legal entity and are part of the same group as a CRA with an existing ESMA registration. This will allow time for us to assess these applications. This regime is distinct from the Temporary Permission Regime for inbound passporting EEA firms and funds.  

For firms not falling into the above categories, applications to register as a CRA will be assessed in accordance with the usual procedures in the CRA Regulation.

We will consult on the fees that CRAs will have to pay in Q4 2018. 

Next Steps 

CRAs should let us know if they intend to offer services to UK markets from exit day. 

Email: cra-registration@fca.org.uk 

The Treasury intends to publish the draft SI in due course and lay the SI before Parliament in the Autumn. If, as expected, the UK enters an implementation period after Brexit, the changes made in the SI will not take effect on 29 March 2019. 

We are consulting on updating our Binding Technical Standards to reflect the changes that will be introduced through the SI.

Indicative Timeline 

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