Hard Brexit: The Impact For US CFTC-Registered Entities11.21.2018
This paper highlights the issues that must be addressed in the case of a ‘hard’ Brexit. Specifically, it:
- Identifies exiting US Commodity Futures Trading Commission (CFTC) equivalence determinations and no-action relief that is currently provided to the European Union (EU) and should be extended to entities registered with the CFTC in order to preserve continuity and market stability once the UK exits the EU.
- Analyzes the impact of a hard Brexit on US market participants, and where appropriate, proposes regulatory and contractual solutions to minimize any negative impacts a hard Brexit would have on US market participants.
We note that Brexit discussions are ongoing and, based on developments, the regulatory and contractual approaches may change.
Review of trading desks found that incoming banks did not yet retain full control of their balance sheets.
UK has a greater market share than pre-Brexit for on-venue execution of GBP interest rate swaps.
Recognition has been temporarily extended until 30 June 2025.
The trade repository has been providing UK services since the first business day after Brexit on 4 Jan 2021.
European firms could operate temporarily in the UK after Brexit while seeking full authorisation.