12 March 2020

This article was written by Natalie Lim.

Key points from the statements, which apply to UK and EU regulated financial services firms and issuers and can be found here and here, include:

Business continuity – Firms should have contingency plans in place and be ready to apply them, to ensure business and operational continuity. The FCA, alongside the Bank of England, is actively reviewing the contingency plans of a range of UK firms. 

Regulatory obligations – The FCA has highlighted that it expects UK firms to take all reasonable steps to meet their regulatory obligations. ESMA has recommended that asset managers should continue to apply existing regulatory requirements on risk management and react accordingly.

Working arrangements – UK firms may use backup sites or allow staff to work from home, provided that they are able to meet regulatory standards including: being able to enter orders and transactions promptly into the relevant systems, using recorded lines when trading, and ensuring that staff have access to compliance support.

Market disclosures – In line with transparency obligations under the Market Abuse Regime, ESMA expects issuers to disclose any relevant significant information relating to the impact of Covid-19 on their fundamentals, prospects or financial situation as soon as possible. 

Financial reporting – To the extent possible, issuers should provide transparency on the actual and potential impacts of Covid-19 in their 2019 year-end financial report (if not yet finalised) or in their interim financial reporting disclosures. This should be based on both qualitative and quantitative assessments on their business activities, financial situation and economic performance.

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