Bank of England and Financial Conduct Authority – Memorandum of Understanding on the Supervision of Financial Market Infrastructure

The Bank of England FCA MoU review confirms that their supervisory cooperation for financial market infrastructure remains strong and effective. Feedback from CCPs, RIEs, and RCSDs highlights high policy coordination and successful joint workstreams with minimal regulatory overlap.

The framework for cooperation is set out in a memorandum of understanding (MoU)¹. This MoU facilitates effective supervision and policy making by exchanging information between the regulators and promotes efficiency by minimising duplication of regulatory activities regarding FMIs. Signatories must review the MoU annually² to confirm whether the intended arrangements are proving effective. This involves requesting feedback from supervised firms on whether the proposed cooperation is working effectively as part of the review process.

The Bank and FCA wrote to FMIs: Central Counterparties (CCPs), Recognised Investment Exchanges (RIEs) and Recognised Central Securities Depositories (RCSDs); to review their cooperation, based on these firms’ interaction in 2024. Respondents welcomed the opportunity to provide feedback and reported a high degree of coordination across both policy and supervisory matters. Respondents remain fully supportive of the MoU and recognise the importance of effective planning and coordination between the Bank and the FCA.

Respondents specifically noted the benefits of a coordinated approach to work on operational resilience, including parallel consultations on ‘Operational Incident and Third-Party Reporting’, noting the value in clearer reporting expectations, and consistent frameworks for reporting. The authorities will continue to adopt a coordinated approach as we progress towards publication of a final policy statement in H2 2025.

The Bank and FCA agree that the arrangements of the MoU regarding co-operation continue to be effective with appropriate coordination and no material duplication. This is evidenced by the successful collaboration across several workstreams over the past 12 months, including the Digital Securities Sandbox (DSS) and T+1 settlement. The authorities remain aware that through efficient coordination, we can improve the effectiveness by which we supervise firms. The Bank and FCA will seek to address any specific areas identified by firms.

The FMI MoU was updated in 2024 to reflect changes made by the Financial Services Markets Act (2023).

Both authorities will continue to provide coordinated oversight and respond to firm feedback after the Bank of England FCA MoU was reaffirmed as effective.