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Regulators set out expectations for financial services firms on COVID-19

Overview

The Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA) have set out their expectations for UK and EU regulated financial services firms and issuers in respect of the COVID-19 (coronavirus) outbreak.

These are set out here and here. Firms and issuers should take note of these expectations and, where necessary, take appropriate action.

In summary:

  • Contingency plans: Firms are expected to have contingency plans in place to ensure business and operational continuity and to be ready to apply them.  Contingency plans of UK firms may be subject to review by the FCA. 

  • Regulatory obligations: The FCA expects UK firms to take all reasonable steps to meet their regulatory obligations.

  • Offsite working: The FCA has also said that it has no objection to UK firms making use of backup sites or having staff working from home provided that firms are still able to meet regulatory standards. These include firms being able to enter orders and transactions promptly into the relevant systems, using recorded lines when trading and staff having access to compliance support.

  • Fund Management: ESMA expects asset managers to continue to apply existing regulatory requirements on risk management and to react accordingly.

  • Market disclosures: Where issuers have relevant significant information concerning the impact of COVID-19 on their fundamentals, prospects or financial situation, ESMA expects them to make the appropriate disclosures as soon as possible in accordance with their transparency obligations under the Market Abuse Regulation.

  • Financial Reporting: Issuers should provide transparency on the actual and potential impacts of COVID-19, to the extent possible. This should be based on both a qualitative and quantitative assessment on their business activities, financial situation and economic performance and should be included in their 2019 year-end financial report (if not yet finalised) or in their interim financial reporting disclosures.

Both the FCA and ESMA are continuing to monitor developments.

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