01.31.2020

Regulators Update Brexit Guidance

The European Securities and Markets Authority (ESMA) is publishing this statement to clarify issues relating to its governance and the reporting obligations for UK entities from 1 February 2020 following the United Kingdom’s (UK) withdrawal from the European Union (EU).

The terms of the Withdrawal Agreement (WA) stipulate that UK representatives will no longer be permitted to participate in the EU institutions, agencies, or other bodies, and their governance structures, except where exceptionally justified, under the conditions set out in Article 128(5) of the WA. Therefore, from 1 February:

·         the UK Financial Conduct Authority (FCA) will no longer be a member of ESMA’s Board of Supervisors or participate in any of ESMA’s other governance bodies.

By virtue of the WA, EU law will continue to apply to the UK, as if it were a Member State, during the transition period from 1 February 2020 to 31 December 2020. This means for instance that:

·         rights and obligations for UK entities under EU law will also continue to apply – such as reporting and notification obligations under MiFIDII/MiFIR, EMIR, CSDR, AIFMD, MMFR; and

·         ESMA will continue to directly supervise registered Credit Rating Agencies, Trade Repositories and Securitisation Repositories established in the UK during this period.

Next steps

In the coming eleven months, ESMA will continue monitoring the application of EU law to/in the UK and will closely monitor developments in preparation for the end of the transition period. ESMA will also engage and provide input as necessary with/to the European Commission.

Source: ESMA

On 31 January 2020 at 11pm the UK will leave the European Union (EU) and enter an implementation period, which is due to last until 31 December 2020. During the implementation period, EU law will continue to apply. Firms and funds will continue to benefit from passporting between the UK and EEA. Consumer rights and protections derived from EU law will also remain in place.

There will therefore be no changes to the reporting obligations for firms, including those for MiFIR transaction reporting, under EMIR, and for CRAs, which will continue in line with existing EU regulatory requirements.

The windows for EEA firms to notify us that they want to use the Temporary Permissions Regime (TPR), or for fund managers to notify us of any funds they want to continue to market in the UK under the Temporary Marketing Permissions Regime (TMPR), will close at the end of today (30 January).

Firms and fund managers that have already submitted a notification need take no further action at this stage. We will confirm our plans for reopening the notification window later this year, which will allow additional notifications to be made by firms and fund managers before the end of the implementation period.

Andrew Bailey, Chief Executive of the Financial Conduct Authority, said:

‘The work the FCA has undertaken, along with government and the Bank of England, ensured the financial services sector was one of the best prepared industries for any of the possible Brexit outcomes. The implementation period gives firms a period of certainty while negotiations are continuing on our future relationship with the EU.

‘The FCA intends to use this time to work with government, the Bank of England, firms and other regulators to ensure the financial services industry is ready for the end of 2020. We will continue to keep firms and consumers updated on any changes that will impact them.’

As things develop during the year, all financial services firms should consider how Brexit will impact their business and what action they need to take to be ready for 1 January 2021 to minimise risks to customers.

The FCA will continue to provide regular updates on our dedicated Brexit webpages, and firms can also call the FCA Brexit information line (0800 048 4255) if they have any further questions.

Source: FCA

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