Bank of England and Financial Conduct Authority – Memorandum of Understanding on the supervision of financial market infrastructure and payment systems


The Bank of England (Bank) co-operates with both the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR)1 to supervise financial market infrastructure (FMI) and payment systems, respectively.

The frameworks for co-operation with these authorities are set out in two memoranda of understanding (MoU). These MoUs facilitate effective supervision and policy making by exchanging information between the regulators and promote efficiency by minimising duplication of regulatory activities regarding FMIs. Signatories must review the MoUs annually to confirm whether the intended arrangements are proving effective. This involves requesting feedback from supervised firms on whether the proposed co-operation is working effectively as part of the review process. 

The Bank and FCA held a consultation with FMIs: Central Counterparties (CCPs), Recognised Investment Exchanges (RIEs) and Central Securities Depositories (CSDs); and reviewed their co-operation in relation to these firms. FMI respondents emphasised the importance of effective co-ordination and there was mostly positive feedback on the regular and constructive engagement with the Bank and FCA in the context of significant market disruptions during 2022, including following Russia’s invasion of Ukraine in February 2022. One respondent identified that on one occasion the Bank and FCA could have taken a more consistent approach to the review of its materials to minimise delay or duplication. Respondents also mostly noted effective co-operation between the Bank and FCA on operational resilience – however, one respondent identified an instance where improved coordination between the Bank and FCA could have reduced regulatory burden. FMIs also encouraged close co-ordination between the authorities on emerging priorities like the Financial Services Markets Act 2023 (FSMA), (also known as the Smarter Regulatory Framework) and development of international standards on operational resilience. 

Overall, the Bank and the FCA concluded that the MoU’s arrangements for co-operation remain effective. In the main, there has been strong co-ordination and material duplication has been avoided.  

The authorities will continue to enhance co-operation and address any specific areas identified by firms.  This includes ensuring strong cooperation as firms continue to implement new policies on operational resilience. The authorities have also made minor updates to the MoU to ensure it remains up to date in light of regulatory changes, including the UK’s withdrawal from the European Union.

The Bank and FCA remain committed to co-operating domestically and internationally to ensure sound rulemaking that reflects awareness of the others’ objectives. The authorities will keep this MoU under review to ensure the ongoing effectiveness of cooperation on policy development as the programme of rulemaking to replace retained EU law continues.

1 Payment Systems Review of MoU Performance in 2022


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