CFTC Extends Existing Brexit-Related Relief
The Commodity Futures Trading Commission’s Market Participants Division (MPD) and Division of Market Oversight (DMO) announced they are extending previously granted temporary no-action relief to provide greater certainty to the global marketplace in connection with the withdrawal of the United Kingdom from the European Union, known as Brexit.
“These extensions are just one of many examples of the CFTC’s efforts to support the sound functioning of global financial markets,” said Chairman and Chief Executive Heath P. Tarbert. “We will continue working with our counterparts across the Atlantic to take whatever steps are necessary to ensure the continuity of derivatives trading and clearing in markets impacted by Brexit.”
“MPD is committed to providing market participants with the regulatory certainty and confidence they need to continue trading and dynamically managing their risk in the global derivatives markets,” said MPD Director Joshua Sterling.
“The relief we are providing further demonstrates DMO’s commitment to global swaps markets that are transparent, fair, competitive, secure, and free of fragmentation,” added DMO Director Dorothy DeWitt.
NEWS: Today, CFTC staff announced an extension of existing Brexit-related relief to provide market certainty. More here: https://t.co/nOnPzCQzSh
— CFTC (@CFTC) November 24, 2020
In anticipation of the expiration of the Brexit transition period on December 31, 2020, MPD and DMO are issuing two no-action letters to extend regulatory relief provided in April 2019. [See Press Release No. 7910-19] One letter ensures the omnibus relief provided by the Division of Swap Dealer and Intermediary Oversight (now reorganized as MPD) to EU entities in certain staff letters continues to be available for UK entities following the end of the transition period. The other letter stipulates that MPD and DMO will provide temporary relief to ensure the continued availability of substituted compliance and regulatory relief under CFTC comparability determinations and exemptive orders the CFTC originally issued for EU entities.
The relief will become effective upon the expiration of the Brexit transition period.
The CFTC has taken a number of other steps to facilitate a smooth transition upon withdrawal of the UK from the EU. For example, in February 2019, the CFTC, the Bank of England and its Prudential Regulation Authority, and the Financial Conduct Authority issued a statement regarding the continuity of derivatives trading and clearing post-Brexit. [See CFTC Press Release No. 7876-19]
The UK withdrew from the EU on January 31, 2020 and entered into a transition period during which EU law continues to apply in the UK.
European firms could operate temporarily in the UK after Brexit while seeking full authorisation.
The total value of UK financial services exports remained stable in 2020.
Temporary equivalence was set to expire on June 30, 2022.
The Bank has new powers for reviewing CCPs following Brexit.
Restricting access to London CCPs would result in collateral damage for EU banks and end users.