The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved the proposal of Securities & Exchange Board of India (SEBI) to sign an updated Alternative Investment Fund Managers Directive (AIFMD) MoU signed between SEBI and Financial Conduct Authority (FCA), UK, pursuant to UK's exit from the European Union on 31st January 2020.

Major impact

The UK exited the EU on 31st January 2020. FCA, UK had submitted to SEBI that no transitional measures would be available if the amended MoU is not signed before the date when the UK exits the European Union (Brexit), and requested SEBI to sign an updated MoU as early as possible. As such, the proposal is not expected or intended to have any effect on employment in India.

 Background

In accordance with the requirement of establishing adequate supervisory cooperation arrangements between EU and non-EU authorities under the European Union Alternative Investment Fund Managers Directive (AIFMD), a bilateral MoU was signed by SEBI with securities regulators of 27 member States of EU / European Economic Area, including Financial Conduct Authority (FCA), United Kingdom on 28th July 2014. In the context of UK's proposed withdrawal from EU, FCA brought to the notice of SEBI that the existing MoU between SEBI and FCA relating to AIFMD, which is currently anchored on EU law, will no longer apply directly in the UK, and have therefore, suggested signing an updated MoU after amending the AIFMD MoU by suitably modifying it and substituting references to EU legislation with the relevant UK law.

AIFMD supervisory cooperation: updated MoU aligns SEBI-FCA references to UK law ensuring continued cross-border regulatory cooperation. An updated AIFMD Memorandum of Understanding between SEBI and the UK Financial Conduct Authority replaces EU legislative references with UK law to maintain the supervisory cooperation framework required under the Directive; the FCA requested timely signature because no transitional measures would be available post-withdrawal.