ISDA Response On Brexit Novations
ISDA sent a letter to ESMA and the European Commission commenting on the proposed technical standards on Brexit-related novations. ISDA welcomes these standards that seek to give relief from the margining and clearing requirements to OTC derivative contracts that are transferred (novated) from a UK to an EU counterparty.
However, the fact that the relief is contingent on the event of a no-deal Brexit makes it operationally difficult for firms to enter into agreements to novate contracts. We have concerns that EU counterparties are therefore required to wait until closer to exit day before carrying out the novations.
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.