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Financial Regulatory Developments Focus
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The following posts provide a snapshot of the principal U.S., European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

  • HM Treasury Published Response to Phase I of UK's Financial Services Future Regulation Framework Review
    03/11/2021

    HM Treasury has published its response to the call for evidence on Phase I of the U.K. Financial Services Future Regulatory Framework Review. The FRF Review was announced in March 2019 and will assess whether the U.K. financial services regulatory framework is fit for purpose, taking into account the U.K.'s exit from the EU, climate change and other global and technological challenges. The call for evidence on Phase I of the Review focussed on how the Government and regulators work together to ensure the best outcome for the financial services sector.

    Read more.
  • UK Listings Review Recommends Major Overhaul of the UK’s Listing and Capital Markets Rules
    03/03/2021

    The U.K. Government has published the report by Lord Hill on the U.K. Listings Review.  The report assesses how, following Brexit, the existing U.K. listing regime could be reformed to attract more companies, particularly innovative technology and life sciences companies, to raise capital in London.  In the context of Brexit, the U.K. is considering the challenges to London's position as a global capital markets hub. The Review makes 14 specific recommendations to address these challenges, including changes to the Financial Conduct Authority's premium and standard segment listing rules on which the FCA will be asked to consult and more general changes in relation to prospectuses on which HM Treasury will need to consult. In addition, the Review identifies longer- term areas for reform, such as secondary capital raises and the greater empowerment of retail investors. 

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  • European Securities and Markets Authority Consults on 2021 Supervisory Fees for EU Trade Repositories
    02/22/2021

    The European Securities and Markets Authority has published a consultation on its proposals for recalibrating the 2021 annual supervisory fees to be charged by ESMA to EU trade repositories. ESMA's annual fees are intended to cover its costs for supervising EU trade repositories, and to be proportionate to the turnover of the trade repository concerned.

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  • EU Delays Derivatives Margin for Brexit Novations
    02/17/2021

    An EU Commission Delegated Regulation amending Regulatory Technical Standards on the application of EU bilateral margining requirements under the European Market Infrastructure Regulation has been published in the Official Journal of the European Union. The amendments to the RTS further extend the temporary exemptions from bilateral margining requirements for the following products and transactions.

    Read more.
  • EU Delays Clearing Obligation for Third-Country Intragroup Derivatives and Brexit Novations
    02/17/2021


    An EU Commission Delegated Regulation delaying the clearing obligation under the European Market Infrastructure Regulation has been published in the Official Journal of the European Union. The Delegated Regulation amends the three Regulatory Technical Standards on the clearing obligation, which provide for the application of the clearing obligation to interest rate swaps and credit default swaps. In particular, for intra-group derivatives transactions conducted with a third-country entity, the exemption from the clearing obligation will be extended until June 30, 2022. The EU has failed to determine whether many third countries are "equivalent" for these purposes, meaning that another delay is necessary to avoid penal charges on intra-group exposures of EU financial groups.

    Read more.

  • UK Conduct Regulator Publishes Approach to International Firms
    02/03/2021

    The U.K. Financial Conduct Authority has published its final Approach to international firms, setting out its approach to authorization and supervision of international firms providing or seeking to provide financial services that require authorization in the U.K. The FCA has also published a feedback statement summarizing its response to the submissions received in response to its consultation last year. The Approach Document sets out the conditions against which a firm will be assessed and discusses the circumstances in which firms may present higher risks and how the risks could be mitigated. It generally proposes that U.K.-authorized firms should have a U.K. place of business, so would not result in any new regime for EU firms which are currently using the "temporary permissions regime".

    The FCA's Approach Document is not relevant to firms that are operating in the U.K., but do not need authorization to do so, for example, those firms using the Overseas Persons Exclusion. It is not also not relevant for payment services firms, e-money institutions, depositaries, trustees and managers of U.K. authorized funds, international alternative investment fund managers and international benchmark administrators.

    Firms that are or would be subject to dual regulation, should also consider the approach of the Prudential Regulation Authority to the supervision and authorization of firms.

    View the FCA's Approach to International Firms.

    View the FCA's feedback statement.

    View details of the PRA's consultation on its approach to supervising international banks.
  • UK Equivalence Decision for Swiss Exchanges Enters into Force
    02/03/2021

    The U.K.'s Swiss share trading obligation equivalence decision has entered into force. The equivalence decision has been made under the U.K.'s Markets in Financial Instruments (Switzerland Equivalence) Regulations 2021, which came into force on February 3, 2021, and means that U.K. investment firms will be able to comply with the share trading obligation under the U.K. Markets in Financial Instruments Regulation by trading shares on BX Swiss AG and SIX Swiss Exchange AG. 

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  • EU Authority Issues Statement on Reverse Solicitation under MiFID II
    01/13/2021

    The European Securities and Markets Authority has issued a statement reminding firms of the rules on reverse solicitation under the Markets in Financial Instruments Directive and Regulation. MiFID II provides that EU retail or professional clients may reach outside the EU and acquire services and products from non-EU investment banks (known as "reverse solicitation") and that in these circumstances the third-country firm is exempt from the requirement to establish an EU branch. ESMA has issued the statement following what it describes as "questionable practices" materializing following the end of the Brexit transition period, where firms have purported to opt clients into "reverse solicitation" through either generic terms and conditions amendments or click-through "I agree" boxes online. It is clear from this guidance that ESMA's view is that more is needed than this to invoke the reverse solicitation regime. Notably, the ESMA report does not criticise more robust reverse solicitation protocols that are currently being seen in the market, such as a termination notice by the U.K. service provider of the existing agreement, sometimes with a covering note that the client could at its initiative reach out afresh to request entry into of a new agreement should it so desire.

    View ESMA's statement on reverse solicitation.

    You may like to view our client note, "On the Existence of a Pan-European Reverse Solicitation Regime Under MiFID II, and its Importance on a 'Hard' Brexit".
  • UK Grants Equivalence to Swiss Exchanges for Purpose of UK Share Trading Obligation
    01/13/2021
     

    U.K. legislation has been made granting equivalence to Swiss exchanges under the U.K.'s Markets in Financial Instruments Regulation. The Markets in Financial Instruments (Switzerland Equivalence) Regulations 2021, which enter into force on February 3, 2021, grant equivalence to two Swiss exchanges - BX Swiss AG and SIX Swiss Exchange AG. U.K. MiFIR requires U.K. investment firms to ensure that the trades they undertake in shares admitted to trading on a regulated market or traded on a trading venue take place on a regulated market, multilateral trading facility, systematic internaliser or equivalent third-country trading venue. U.K. investment firms will be able to comply with the U.K. MiFIR share trading obligation by trading shares on these Swiss exchanges.

    Read more.

  • UK Government Proposes Extending Regulatory Perimeter to Capture Stablecoins
    01/07/2021

    HM Treasury has opened a consultation on the proposed U.K. approach to crypto-assets and stablecoins, in particular a proposal to bring stablecoins into the U.K. regulatory perimeter. Responses to the consultation may be submitted until March 21, 2021. The government will consider the responses to the consultation and publish a response with further details on how the approach would be implemented in law. If the policy approach is followed, the regulators would consult further on rules for firms.

    Read more.
  • UK Prudential Regulator Publishes Final Rules on Implementation of CRD V
    12/28/2020

    The U.K. Prudential Regulation Authority has published its final Policy Statement setting out the final rules for implementing CRD V in the U.K. The Policy Statement confirms the final rules set out in the PRA's near-final Policy Statement, published on December 9, 2020. The Policy Statement also confirms the PRA's proposed approach to enforcing compliance with consolidated prudential requirements for U.K. banking consolidation groups, as proposed in the PRA's consultation paper published on December 9, 2020. The Supervisory Statements and Statements of Policy attached to the Policy Statement should be read together with the PRA's Supervisory Statement, "Non-binding PRA materials: The PRA's approach after the UK's withdrawal from the EU", for guidance on how to interpret the materials after the end of the transition period.

    Read more.
  • UK Government Seeks Input on UK Framework for Cross-Border Financial Services
    12/15/2020

    HM Treasury has launched a call for evidence on the U.K.'s framework for cross-border financial services. HM Treasury is considering policy approaches for ensuring the U.K. framework is fit for the future given the U.K.'s exit from the EU, including consideration of how effective and proportionate regulation can support attracting investment and liquidity to the U.K. Responses to the consultation may be submitted until March 11, 2021.

    Read more.
  • UK Central Securities Depository Granted Temporary Recognition by the European Securities and Markets Authority
    12/11/2020

    The European Securities and Markets Authority has announced that Euroclear UK & Ireland Limited, a central securities depository established in the U.K., will be granted recognition under the EU CSD Regulation. The recognition will allow Euroclear UK & Ireland Limited to continue to provide certain services to EU customers after the end of the Brexit transitional period until at least June 30, 2021. ESMA's recognition decision follows the November 2020 temporary equivalence decision granted to U.K. CSDs.

    View ESMA's announcement.

    View details of the EU's equivalence decision for U.K. CSDs.
  • UK Prudential Regulator Publishes Policy Statement and Near-Final Rules on Implementation of CRD V
    12/09/2020

    The U.K. Prudential Regulation Authority has published a policy statement setting out responses to its consultations on the U.K. implementation of CRD V, as well as its near-final policy material. The final rule instruments will be published in time for the December 28, 2020 deadline for implementation of CRD V. The policy statement is relevant to U.K. banks, building societies, PRA-designated investment firms and U.K. financial holding companies and mixed financial holding companies.

    Read more.
  • UK Prudential Regulator Consults on Banking Consolidation Group Prudential Compliance During Brexit Transition Period
    12/09/2020

    The U.K. Prudential Regulation Authority has launched a consultation on which bank entities should be responsible for ensuring compliance with consolidated prudential requirements for U.K. banking consolidation groups for a transitional period between December 28, 2020 and the date on which the relevant group's parent holding company is approved or declared exempt from the requirements under the PRA's approval regime.

    Read more.
  • EU Authorities Warn of Potential Loss of Preferential Capital Treatment for STS Securitizations
    12/07/2020

    The European Supervisory Authorities have issued a press release warning of the change in the status of "simple, transparent and standardized" securitization transactions at the end of the Brexit transition period on December 31, 2020. The Securitization Regulation provides the criteria for identifying which securitizations will be designated as STS securitizations, a system to monitor the application of those criteria as well as common requirements on risk retention, due diligence and disclosure. Related amendments to the EU Capital Requirements Regulation set out the regulatory treatment of exposures to securitizations that are deemed to be STS securitizations. For a securitization to qualify as an STS securitization, the EU Securitization Regulation requires the originator, sponsor and securitization special purpose entity to be established in the EU. The ESA's announcement highlights that securitizations that currently meet the STS criteria may not do so from January 1, 2021, if one or more of the originator, sponsor or SSPE are established in the U.K. The loss of STS status will mean that the EU CRR preferential capital treatment is no longer available.

    The European Securities and Markets Authority will be working with EU national regulators to ensure that its database of STS securitizations is up to date as at January 1, 2021.

    View the ESA's press release.
  • EU Grants Temporary Equivalence for UK Central Securities Depositories
    11/26/2020

    An EU equivalence decision has been published in the Official Journal of the European Union granting temporary equivalence for U.K. central securities depositories from the end of the Brexit transitional period (on December 31, 2020). The equivalence decision applies to CSDs already established in the U.K. and will apply from January 1, 2021 until June 30, 2021.

    View the EU equivalence decision for U.K. CSDs.
  • EU Markets Authority Confirms Position on Derivatives Trading Obligation Post-Brexit
    11/25/2020

    The European Securities and Markets Authority has confirmed its position, originally proposed in March 2019, that the derivatives trading obligation under the EU Markets in Financial Instruments Regulation will continue to apply without changes, and as things stand without any U.K. equivalency, after the end of the Brexit transition period on December 31, 2020.

    The derivatives trading obligation requires EU investment firms to conclude transactions in certain derivatives on EU regulated markets, multilateral trading facilities, organized trading facilities or third-country venues in jurisdictions benefiting from an EU equivalence decision. The trading obligation applies to certain fixed-to-float interest rate swaps denominated in EUR, USD and GBP and to certain index credit default swaps (iTraxx Europe Main and iTraxx Europe Crossover).

    Read more.
  • Revised Final Draft EU Technical Standards Published for Derivatives Margin and Clearing Obligations
    11/23/2020

    The European Supervisory Authorities have published final draft amending Regulatory Technical Standards on the application of EU bilateral margining requirements and the clearing obligation under the European Market Infrastructure Regulation in light of Brexit. The draft RTS are set out in two separate reports – one published jointly by the ESAs (covering the bilateral margining requirements for uncleared derivatives), the other published by the European Securities and Markets Authority (covering the clearing obligation for certain derivatives).

    Read more.
  • HM Treasury and U.K. Regulators Publish Statement on Implementation Date for Prudential Reforms for UK Investment Firms
    11/16/2020

    HM Treasury has issued a joint statement with the U.K. Financial Conduct Authority and the Prudential Regulation Authority confirming a targeted implementation date of January 1, 2022 for the reforms to the prudential regulation of U.K. investment firms set out in the U.K. Financial Services Bill.

    Read more.
  • EU Authority Updates Statements on Reporting Obligations Post-Brexit Transitional Period
    11/10/2020

    The European Securities and Markets Authority has published updated statements regarding the end of the Brexit transition period on December 31, 2020. 

    Read more.
  • UK Grants Equivalence to EEA CCPs
    11/10/2020

    The U.K. Central Counterparties (Equivalence) Regulations 2020 (SI No. 2020/1244) have been made, granting equivalence for EEA CCPs from 10:59 pm on December 31, 2020. The decision will enable U.K. businesses and trading venues to continue using the clearing services of EEA CCPs under the U.K. European Market Infrastructure Regulation after the end of the Temporary Recognition Regime, provided that the Bank of England grants the individual CCP concerned recognition status.

    The EU has granted temporary equivalence for U.K. CCPs, which is set to expire in June 2022.

    View the Central Counterparties (Equivalence) Regulations 2020, SI No. 2020/1244.

    View details of the temporary equivalence decision for U.K. CCPs.
  • EU Moves to Ease Brexit Implications for Post-Trade Transparency and Position Limits Regime
    10/27/2020

    Following its statement at the start of October 2020, the European Securities and Markets Authority has announced that U.K. trading venues have been positively assessed for the purposes of the post-trade transparency obligations and position limits regime under the Markets in Financial Instruments package. From January 1, 2021, EU investment firms will not be required to make transactions public in the EU via an EU Approved Publication Arrangement if they are executed on a U.K. trading venue that appears on ESMA's transparency list. In addition, commodity derivative contracts traded on U.K. trading venues that are on ESMA's position limits list will not be considered as economically equivalent OTC contracts and will thus not be subject to the EU position limit regime.

    View ESMA's announcements and lists.

    View details of ESMA's earlier statement in October.

    View details of the FCA's statement on the U.K.'s position.
  • EU Publishes Further Statement on Endorsement by EU Credit Rating Agencies of UK Ratings After the Brexit Transition Period
    10/27/2020

    The European Securities and Markets Authority has published a further statement confirming that U.K. credit ratings can be endorsed by EU credit rating agencies from January 1, 2021, when the Brexit transition period ends. The EU CRA Regulation provides that banks, investment firms, insurers, reinsurers, management companies, investment companies, alternative investment fund managers and CCPs may use credit ratings only for certain regulatory purposes if a rating is issued by: (i) an EU CRA registered with ESMA; or (ii) a third-country CRA under the endorsement regime or the equivalence/certification regime. There is currently no equivalence decision for the U.K. CRA regime. Therefore, EU entities may use U.K. credit ratings only for regulatory purposes if the rating has been endorsed by an EU CRA. ESMA confirmed in March 2019 a positive assessment of the U.K.'s CRA regime for the purposes of endorsement. However, the final decision to endorse is for an EU CRA.

    Read more.
  • EU Markets Authority Updates Post-Brexit Position on EU Share Trading Obligation
    10/26/2020

    The European Securities and Markets Authority has published an updated statement on the impact of Brexit on the trading obligation for shares where no decision on the U.K.'s equivalence as a third country market has been made. The EU Markets in Financial Instruments Regulation requires investment firms to conclude transactions in shares admitted to trading on a regulated market or traded on an EU trading venue, i.e., namely regulated markets, multilateral trading facilities, systematic internalisers and equivalent third-country trading venues. The U.K. has adopted this requirement in its onshored MiFID II legislation. Similarly, following its exit from the EU, the new U.K. onshored share trading obligation would restrict the trading of shares in the U.K. to trades on U.K. trading venues unless a third-country equivalence decision was made.

    Read more.
  • UK Parliament Publishes Financial Services Bill for Post-Brexit Regulatory Framework
    10/21/2020

    The U.K. Government has published a Financial Services Bill setting out a proposed regulatory framework for the financial services industry following the U.K.'s exit from the EU. The Bill is part of the U.K.'s wider initiative under the Future Regulatory Framework Review to re-frame its regulatory framework. Although Brexit has brought challenges to the financial sector, there may also be post-Brexit opportunities for the U.K. to seize. The aim of these reforms is to cement the U.K.'s position as a global financial centre of excellence. A core piece of that will be to set conditions that continue attracting business to the U.K. and to look for opportunities to cut "red tape" whilst at the same time maintaining the U.K.'s globally recognized high regulatory standards.

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  • UK Prudential Regulator Issues Further Consultation on Implementation of CRD V and CRR II
    10/20/2020

    The U.K. Prudential Regulation Authority has published a further consultation on its proposed implementation of the fifth Capital Requirements Directive. CRD V came into force in July 2019. EU Member States are required to implement the majority of CRD V provisions by December 28, 2020. As this is prior to the end of the U.K.'s Brexit transition period, the U.K. is obliged to transpose those provisions of CRD V that are applicable befor the end of the transition period into U.K. law under the terms of the EU-U.K. Withdrawal Agreement.

    Read more.
  • HM Treasury Consults on Phase II of UK's Financial Services Future Regulation Framework Review
    10/19/2020

    HM Treasury has launched a consultation on Phase II of the U.K.'s Financial Services Future Regulatory Framework Review. Phase II focuses on how the U.K.'s financial services regulatory framework must be adapted to be fit for the future given the U.K.'s exit from the EU. The first part of Phase II, to which this consultation relates, seeks to establish a blueprint for financial services regulation. Responses to the consultation should be submitted by February 19, 2021. The second part of Phase II will constitute a final package of proposals and will be consulted on later in 2021.

    Read more.
  • HM Treasury Publishes Results of Consultation on CRD V Implementation
    10/15/2020

    HM Treasury has published a summary of the responses to its consultation on the U.K.'s implementation of the fifth Capital Requirements Directive, together with HM Treasury's proposed next steps. CRD V came into force in July 2019 and EU Member States are required to implement the majority of its provisions by December 28, 2020. As this is prior to the end of the U.K.'s Brexit transition period, the U.K. is obliged to transpose these provisions of CRD V that are applicable before the end of the transition period into U.K. law under the terms of the EU-U.K. Withdrawal Agreement. 

    Read more.
  • UK Conduct Regulator Bans Sale to Retail Clients of Derivatives Referencing Crypto-Assets from January 2021
    10/06/2020

    The U.K. Financial Conduct Authority has published a Policy Statement and final rules prohibiting the sale, marketing and distribution to retail clients of derivatives and exchange traded notes referencing certain types of unregulated, transferable crypto-assets by firms acting in, or from, the U.K. The ban will apply from January 6, 2021.

    The prohibition will apply to the marketing, distributing or selling of crypto derivatives in, or from, the U.K. to retail clients by MiFID investment firms, MiFID optional exemption firms, U.K. branches of third-country investment firms and to EEA MiFID investment firms that currently passport into the U.K. and which will continue operating after the Brexit transitional period ends on January 1, 2021.

    Read more.
  • UK Conduct Regulator Confirms Post-Brexit Position on Post-Trade Transparency and Position Limits
    10/02/2020

    The U.K. Financial Conduct Authority has issued a statement confirming the U.K. position from January 1, 2021, for post-trade transparency reporting obligations and position limit regime under the U.K. Markets in Financial Instruments package. The FCA confirms that:
    • U.K. firms trading on non-U.K. trading venues will not be required to publish details of those transactions through a U.K. Approved Publication Arrangement; and
    • Commodity derivative contracts traded on trading venues are not considered by the FCA to be economically equivalent OTC contracts and will not be subject to the U.K. commodity derivatives position limits regime.

    The FCA's statement follows the statement made the previous day by the European Securities and Markets Authority that it intended to assess U.K. trading venues for the purpose of the EU post-trade transparency obligations and position limits regime. If ESMA assesses a U.K. trading venue positively, then trades on the venue will not need to be reported by EU investment firms through an EU APA, and they will not be subject to the position limits regime.

    View the FCA's statement.

    View details of ESMA's statement.
  • EU to Assess UK Trading Venues to Clarify Post-Brexit Position for Post-Trade Transparency and Position Limits Regime
    10/01/2020

    The European Securities and Markets Authority has published updated statements on the impact of Brexit on the application of the Markets in Financial Instruments package and the EU Benchmark Regulation. ESMA issued statements in 2019 to clarify the position in a no-deal scenario. These latest statements provide updates to take into account the Withdrawal Agreement and the end of the Brexit transition period on December 31, 2020.

    Read more.
  • Final Technical Standards on Third-Country Investment Firm Registration and Reporting Requirements
    09/28/2020

    The European Securities and Markets Authority has published final draft Technical Standards on the provision of investment services and activities in the EU by third-country firms under the Markets in Financial Instruments package. Amendments that were made to the MiFID II package under the Investment Firm Regulation and Directive require, among other things, third-country firms providing services to all types of clients to provide ESMA with further information. In addition, ESMA has increased powers over third-country firms providing services to eligible counterparties and per se professional clients, such as the ability to conduct on-site inspections and impose product restrictions or prohibitions. The revisions will apply from June 26, 2021.

    Read more.
  • EU Grants Temporary Recognition to UK CCPs For End of Brexit Transition Period
    09/28/2020

    The European Securities and Markets Authority has announced that it has granted temporary third-country recognition to three U.K. CCPs from January 1, 2021 under the European Market Infrastructure Regulation. ESMA's announcement follows the time-limited equivalence decision for the U.K.'s legal and regulatory supervision regime of U.K. CCPs, which was published on September 21, 2020. The third-country recognition for ICE Clear Europe Limited, LCH Limited and LME Clear Limited means that EU clearing members of these three CCPs will be able to continue to access the services and that the CCPs will be able to continue to provide their services in the EU at the end of the transition period on December 31, 2020, following the U.K.'s withdrawal from the EU.

    Read more.
  • UK Conduct Regulator Consults on Post-Brexit Approach to Authorization for Non-UK Firms
    09/23/2020

    The U.K. Financial Conduct Authority has launched a consultation on its intended approach to international firms seeking to provide regulated financial services in the U.K. after the Brexit transition period ends on December 31, 2020 and the U.K.'s temporary permissions regime comes to an end three years later.  The FCA intends to use the consultation responses to inform the publication of a document that would explain the FCA's general approach to regulating international firms. The consultation does not propose any changes to the FCA's existing rules or to the FCA Handbook. Responses should be submitted by November 27, 2020.

    Read more.
  • Bank of England Consults on Changes to Brexit Onshoring Legislation
    09/22/2020

    The Bank of England has launched a consultation on proposed changes to the BoE and Prudential Regulation Authority's Brexit onshoring legislation. The U.K. left the EU on January 31, 2020. Under the terms of the EU Withdrawal Agreement, the U.K. agreed that EU legislation continues to apply in the U.K. until the end of the transition or implementation period on December 31, 2020 (known as "IP completion day"). The existing Brexit onshoring legislation ensures that, after EU law ceases to apply in the UK at the end of the transition or implementation period, U.K. legislation remains functional. Further updates to the onshoring legislation and regulatory rules are needed, however, to take account of the transition or implementation period (which delayed the entry into force of the onshoring legislation) and of additional EU legislation that will apply in the U.K. prior to the end of that period.

    Read more.
  • European Commission Decision Temporarily Establishes UK CCP Equivalence
    09/21/2020

    The European Commission has published a Decision temporarily determining that U.K. central counterparties will be deemed equivalent to EU standards under the European Market Infrastructure Regulation. The Decision will apply from January 1, 2021 until June 30, 2022. The U.K.'s Brexit transition period ends on December 31, 2020, after which it will cease to form part of the EU's arrangement for financial services. The Decision grants equivalence for a limited 18-month duration.

    Read more.
  • UK Government Consults on International Regulatory Cooperation Strategy
    09/02/2020

    The U.K. Government has launched a consultation on its future international regulatory cooperation strategy. The consultation has been prompted by a report published by the Organization for Economic Cooperation and Development. In its report, the OECD set out 25 recommendations for how the U.K. can improve its policies and practices in shaping and complying with international agreements and collaborating with international counterparts when designing and enforcing regulations. The report is intended to cover regulatory practices in general, meaning banking regulation falls within the scope of the recommendations. With the U.K. having left the EU on January 31, 2020, and the end of the U.K.'s transitional period due to end on December 31, 2020, the U.K. Government believes there is an opportunity to build new regulatory practices that support the future prosperity of the U.K.

    Read more.
  • UK Prudential Regulator Reminds Firms of Need to Satisfy Temporary Permissions Regime Requirements
    09/01/2020

    The U.K. Prudential Regulation Authority has published a Dear CEO letter addressed to all PRA-regulated firms on operational readiness for the Temporary Permissions Regime. The U.K. left the EU on January 31, 2020 and the related transitional period, during which EU firms maintain their U.K. passporting rights, will expire at 11 pm on December 31, 2020. The TPR will take effect from after that time. The Dear CEO letter reminds firms of their obligations under the TPR and urges them to consider their firm's operational preparedness for entering the TPR, including satisfying their regulatory requirements.

    View the Dear CEO letter.
  • UK Prudential Regulator Consults on UK Implementation of CRD V
    07/31/2020

    The U.K. Prudential Regulation Authority has published a consultation on proposed changes to the PRA rules to implement the fifth Capital Requirements Directive. CRD V came into force in July 2019 and EU Member States are required to implement the majority of its provisions by December 28, 2020. As this is prior to the end of the U.K.'s Brexit transition period, the U.K. must transpose those provisions of CRD V that are applicable before the end of the transition period into U.K. law under the terms of the EU-U.K. Withdrawal Agreement. Certain of those provisions (including those relating to capital buffers and holding company approval and supervision) must be implemented in the U.K. by HM Treasury. Those provisions are the subject of a separate consultation by HM Treasury consultation (published on July 16, 2020). HM Treasury has delegated responsibility for implementation of the remaining provisions to the PRA.

    Read more.
  • UK Government Launches Payments Landscape Review
    07/28/2020

    HM Treasury has launched a call for evidence on the U.K.'s payments landscape, which is the first stage of the Payments Landscape Review announced in June 2019. The government is seeking input on the opportunities, gaps and risks that need to be addressed to support the U.K.'s position as being at the forefront of payments technology. Responses may be submitted until October 20, 2020. The government will publish a summary of the responses it receives and set out next steps for the review.

    In the call for evidence, the government sets out the steps taken to achieve the aims that were published in 2012 to support the high-level strategy of ensuring that end user consumers and businesses benefit from the U.K. payment networks. Feedback is sought on the extent to which those aims have been achieved.

    HM Treasury also discusses the main incentives for new payment systems and services, covering the New Payments Architecture, Faster Payments, the impact of Open Banking on how the systems are used, trends towards new service providers and payment chains and development in cross-border payments. The call for evidence also reflects on the wider work being undertaken on crypto-assets and stablecoins.

    View the call for evidence on the U.K.'s payments landscape.
  • HM Treasury Consults on UK Implementation of CRD V
    07/16/2020

    HM Treasury has launched a consultation on the U.K.'s implementation of the EU amendments to the Capital Requirements Directive that were published in June 2019 (known as CRD V). EU Member States are required to implement the CRD V changes into their national regimes by December 28, 2020. As this is prior to the end of the U.K.'s Brexit transition period, the U.K must transpose those provisions of CRD V that are applicable before the end of the transition period into U.K. law under the terms of the EU-U.K. Withdrawal Agreement. HM Treasury's consultation relates only to those aspects of CRD V that must be implemented via legislation. The rest of CRD V will be implemented by the U.K. Prudential Regulation Authority through updates to the PRA rules. Responses to HM Treasury's consultation should be submitted by August 19, 2020.

    Read more.
  • European Commission Publishes Notices to Financial Services Stakeholders on UK Withdrawal from EU
    07/07/2020

    The European Commission has published a series of updated notices, including many addressed to firms operating in the financial services industry, on the actions that should be taken to prepare for the end of the transition period following the U.K.'s withdrawal from the EU on January 31, 2020. The transition period ends on December 31, 2020. The notices most relevant to the financial services industry relate to asset management, banking and payment services, credit ratings agencies, emissions trading systems and consumer protection and passenger rights. They update and replace the notices originally published in 2018.

    Read more.
  • UK Legislation Made to Onshore EMIR 2.2
    06/26/2020

    The U.K. has published Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020 to onshore the new EU regime for third-country CCPs introduced by amendments to the European Market Infrastructure Regulation, known as EMIR 2.2. EMIR 2.2, which has applied since January 1, 2020, is part of the EU’s push to enhance the regulation of CCPs amid concerns regarding potential CCP failures given their increasing systemic importance and is widely regarded as a direct response to Brexit, given that three of the largest European CCPs are based in the U.K.

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  • UK Regulator Publishes Discussion Paper on New Investment Firm Prudential Regime
    06/23/2020

    The U.K. Financial Conduct Authority has published a discussion paper setting out its initial views on establishing a new Investment Firm Prudential Regime. The EU introduced a new prudential regime for EU investment firms through the Investment Firm Regulation and the Investment Firm Directive, which will (mostly) apply from June 26, 2021. The U.K. encouraged the introduction of the EU IFD and IFR while it was a member of the EU. However, the U.K. will not implement the IFR and IFD into U.K. laws as they come into force after the U.K. has left the EU and after the Brexit transitional period ends.

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  • HM Treasury Consults on UK Transposition of Revised EU Bank Recovery & Resolution Directive
    06/23/2020

    HM Treasury has launched a consultation on the U.K.'s intended transposition of the revised EU Bank Recovery and Resolution Directive (known as BRRD 2). BRRD 2 came into force in June 2019 and introduced a series of amendments to BRRD. EU Member States are required to transpose BRRD 2 into their national laws and apply the provisions by no later than December 28, 2020, except for provisions relating to Minimum Requirements for Own Funds and Eligible Liabilities, which apply from January 1, 2024. Under the terms of the Brexit Withdrawal Agreement, the U.K. government has committed to implementing all EU legislation due to be transposed before the end of 2020. HM Treasury has confirmed that, as the implementation of MREL provisions is not required until 2024, the U.K. intends to exercise its discretion to transpose those requirements. The U.K. already has a MREL framework which is based on the Financial Stability Board's Total Loss Absorbing Capacity standards.

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  • HM Treasury Updates Policy Statement on Prudential Standards for Investment Firms in UK Financial Services Bill
    06/23/2020

    HM Treasury has published an updated policy statement on its proposals for the prudential standards in the U.K.'s upcoming Financial Services Bill. The Financial Services Bill will set out a proposed regulatory framework for the financial services industry following the U.K.'s exit from the EU. HM Treasury published its original policy statement on the proposed prudential regime in March 2020, setting out its plans to: (i) complete the U.K.'s implementation of the remaining Basel III standards; and (ii) establish a new prudential regime for U.K. investment firms.

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  • UK Publishes Post-Brexit Cyber Sanctions Regulations
    06/17/2020

    The U.K. Government has published the Cyber (Sanctions) (EU Exit) Regulations 2020 and an explanatory memorandum. The Regulations are made under the Sanctions and Anti-Money Laundering Act 2018, which was introduced to enable the U.K. Government to implement international sanctions following its departure from the EU. The majority of the SAMLA provisions entered into force on November 22, 2018. The purpose of the Regulations is to ensure that the U.K. has an effective cyber sanctions regime at the end of transitional period (currently scheduled for December 31, 2020) as part of the U.K.'s exit from the EU.

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  • EU Response to UK Letter on Negotiating Positions
    05/22/2020

    The EU's chief negotiator, Michel Barnier, has responded to the letter of May 19, 2020 of U.K. chief negotiator, David Frost. Mr. Frost had notified Mr. Barnier that the U.K. government had published U.K. drafts of the proposed Comprehensive Free Trade Agreement between the U.K. and EU, as well as other agreements and schedules. Mr. Frost's letter had also included comments on some of the EU positions in the negotiations. In his letter, Mr. Barnier states that he does not think that the substantive points of the negotiation should be debated through written correspondence, however, he does go on to respond to the comments. Mr. Barnier states that the EU is not bound to follow as precedent deals that the EU has concluded with other countries, and that the EU is only following the commitments made in the Political Declaration agreed between the EU and the U.K. in October 2019. Mr. Barnier also emphasises that the EU is seeking to obtain a "level playing field", which, according to the EU's chief negotiator means upholding the current common high standards applicable in the EU and in the U.K. at the end of the transition period in the areas of state aid, competition, social and employment standards, environment, climate change and relevant tax matters. It would mean that the U.K. could impose tougher regulations after the transitional period, but would be tied to the existing EU level of standards.

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  • UK Draft Negotiating Documents Published
    05/19/2020

    The U.K. government has published a letter from U.K. chief negotiator David Frost to EU counterpart Michel Barnier and U.K. draft legal texts of the proposed U.K.-EU Comprehensive Free Trade Agreement, as well as other agreements and schedules. The documents set out the U.K. government's position on the future U.K.-EU relationship. In the letter, key points on the U.K.'s position are made. These are:
     
    1. The U.K. is seeking to conclude a suite of agreements with the EU with an FTA at the core, all of which are based on precedent agreements that the EU has with other countries. The U.K. is not seeking to remain in the Single Market or the Customs Union.
    2. The EU's drafts do not include the same text as that agreed with other countries. For example, the EU is not proposing to replicate the inclusion of provisions on regulatory cooperation for financial services that are agreed between the EU and Japan.
    3. The EU proposals are unaligned with the commitment made by both parties to maintain a level playing field. For example, the EU is proposing that the U.K. accept EU state aid rules and be subject to tariffs on trade if those rules were to be breached.
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