Brexit Bloody Hell! Now Stock Exchange Issues

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A sane Cameron and Obama before the conservative rage.

The UK Brexit has problems its mad as a hatter conservative MPs haven’t dreamed of yet, let alone thought about a solution. After eight straight no votes yesterday on different plans to smooth the job-destroying transition out of the EU comes this from US Securities and Exchange Commission. (On the hapless Theresa May see NYT for insight)

The SEC and the United Kingdom Financial Conduct Authority (FCA) today reaffirmed to continue “close cooperation and information sharing in the event of the UK’s withdrawal from the European Union (EU).”

AutoInformed.com on Brexit

SEC Chairman Jay Clayton should be used to such madness.

Well, it seems that there are large risks posed by jurisdictional share trading obligations, which “could increase market fragmentation and impose unnecessary costs on investors,” the SEC said in a ‘whistling past the graveyard’ observation. Hell, it’s not even clear that the UK can continue to be a key market for funds and used by  fund managers in the United States.

SEC Chairman Jay Clayton met with FCA CEO Andrew Bailey and signed two updated Memoranda of Understanding (MOUs) to “ensure the continued ability to cooperate and consult with each other regarding the effective and efficient oversight of regulated entities across national borders.”

Here’s the boilerplate: SEC Chairman Jay Clayton said, “The SEC and the FCA have a long history of effective cooperation on supervisory and other matters.” FCA CEO Andrew Bailey said, “As part of our preparations for Brexit we have been working with our partners in the EU and globally to ensure there is minimal disruption.”

AutoInformed viewers are allowed to laugh heartily at the use of the word preparations when it is abundantly clear that this whole sordid matter came about because of the lack of preparations or even realistic analysis of ,nsay, Irish border problems, tariffs, food and drug shortages, corporate evacuations and the like.

History

The first MOU, originally signed in 2006, is a supervisory arrangement covering regulated entities that operate across the national borders.  The MOU was updated to, among other things, expand the scope of covered firms under the MOU to include firms that conduct derivatives, credit rating and derivatives trade repository businesses to reflect (1 i) post-financial crisis reforms related to derivatives and (2 ii) the FCA’s assumption of responsibility from the European Securities and Markets Authority for overseeing credit rating agencies and trade repositories in the event of the UK’s withdrawal from the EU.

The second MOU, which is required under the UK Alternative Investment Fund Managers Regulations, was originally signed in 2013.  The MOU provides for supervisory cooperation and exchange of information relating to the supervision of covered entities in the alternative investment fund industry. The updated MOU “ensures” that investment advisers, fund managers, private funds and other covered entities in the alternative investment fund industry that are regulated by the SEC and the FCA will be able to continue to operate on a cross-border basis without interruption, regardless of the outcome of the UK’s withdrawal from the EU.

These MOUs will come into being on the date EU legislation ceases to have direct effect in the United Kingdom.

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