Brexit update for financial services firms - week ending 16th November 2018



The EC press release sets out further information on the deal reached on 14 November 2018 and includes links to Q&As and the full text of the agreement itself. Theresa May's statement of 14 November and her statement to HoC on 15 November 2018 appear in the second and third links below. The EC press release can be accessed here, the full text of the Withdrawal Agreement and the political declaration on the future relationship can be accessed here and the PM's statement and Q&A can be accessed here. A joint statement from the UK and the EU on the Withdrawal Agreement can be accessed here. Furthermore, the UK government has published an explainer for the Withdrawal Agreement and the protocol on Northern Ireland which can be accessed here.

In relation to services and in particular financial services the protocol on the future relationship states that the UK and the EU will seek to negotiate:

“Services and Investment

  • Ambitious, comprehensive and balanced arrangements on trade in services and investment, delivering a level of liberalisation in trade in services well beyond the Parties’ WTO commitments, and in line with Article V of the General Agreement on Trade in Services, with substantial sectoral coverage, covering all modes of supply and providing for the absence of substantially all discrimination in the covered sectors, with exceptions and limitations as appropriate.
  • Provisions on market access and national treatment under host state rules, ensuring that the Parties’ services providers and investors are treated in a non-discriminatory manner, including with regard to establishment. While preserving regulatory autonomy, provisions to promote regulatory approaches that are transparent, efficient, compatible to the extent possible, and which promote avoidance of unnecessary regulatory requirements.
  • […]
  • Provisions to enable free movement of capital and payments related to transactions liberalised under the economic partnership, subject to relevant exceptions.

Financial Services

  • Commitments to preserving financial stability, market integrity, investor protection and fair competition, while respecting the parties’ regulatory and decision-making autonomy, and their ability to take equivalence decisions in their own interest. This is without prejudice to the Parties’ ability to adopt and maintain any measure where necessary for prudential reasons.
  • Commencement of equivalence assessments by both parties as soon as possible after the United Kingdom's withdrawal from the Union, endeavouring to conclude these assessment before the end of June 2020
  • Close and structured cooperation on regulatory and supervisory matters, grounded in the economic partnership and based on the principles of regulatory autonomy, transparency and stability, recognising this is in the Parties' mutual interest.”

With regards to enforcement and dispute resolution the protocol also notes:

  • Robust, efficient and effective arrangements for the setting of strategic direction, for the management, supervision, implementation and development over time of the future relationship, of the resolution of disputes and enforcement, and safeguard provisions, in full respect of the Parties' own legal orders, and based on the arrangements for dispute settlement and enforcement provided for in the Withdrawal Agreement.”


Texts of the statements given by Michel Barnier (in French) on 14 November 2018 and by Donald Tusk following his meeting with Michel Barnier follow. The Barnier statement can be accessed here and the Tusk statement here.

Quotes from the statement by Michel Barnier:

“This brings me to my last point, which concerns the framework for such a future relationship. We will prepare ourselves and be ready to start these negotiations on 30 March 2019, the day after the UK's withdrawal.

Today, through this draft Joint Political Declaration, we are outlining the ambitious partnership we want.

- A free trade area based on deeper regulatory and customs cooperation and a level playing field. Our aim is that all goods should be free from customs duties and quotas, building on our proposals in the Withdrawal Agreement for a single customs territory. In line with my mandate from the European Council, this will, of course, be conditional on a new fisheries agreement.

- Sectoral cooperation, which is important and expected, for example on transport or energy.

- Cooperation on internal security, police and judicial cooperation.

- And, of course, on foreign policy, external security and defence.”

Quotes from the statement by Donald Tusk

“Given these extremely difficult circumstances, I would like to thank Michel Barnier and his team, especially Sabine Weyand and Stéphanie Riso, for doing this exceptionally hard work. Michel, we all put a lot of trust in you, and rightly so. You have achieved our two most important objectives. First, you ensured the limitation of the damage caused by Brexit and, second, you secured the vital interests and principles of the 27 member states, and of the European Union as a whole. If I weren't confident that you did your best to protect the interests of the twenty seven, and I am familiar with the essence of the document, I would not propose to formalise this deal.”


This HoL library briefing paper considers the views of each of the EU27 on Brexit. It also includes background on their internal politics and trade and economic statistics. The full report can be accessed here.

“Examining the positions on Brexit taken by the EU27, a number of common themes emerge, notably insistence on the integrity of the EU Single Market and an unwillingness to divide the four market freedoms (relating to goods, services, capital and people) when it comes to negotiating the future UK-EU trading relationship. This has also come alongside concerns that the new trading relationship should not enable the UK to gain a competitive advantage by retaining participation in some elements of the Single Market while no longer being required to comply with all the requirements of membership, including regulations relating to competition, the environment and labour market.”


The EC has published information on its ongoing preparedness and contingency work in the event of no-deal Brexit. A communication outlines a limited number of contingency actions in priority areas that could be implemented (including with regard to financial services, with a particular concentration on the issue of derivative contracts); two legislative proposals have been adopted to amend existing EU law in the area of visas and energy efficiency and a notice has been published providing information on the changes that will occur in the event of no deal for persons travelling between the EU and the UK, and vice versa, after 29 March 2019, or for businesses providing services in relation to such travel. The full document can be accessed here the one in relation to financial services here.

“In the Commission's view, contingency measures adopted at all levels should comply with the following general principles:

  • Contingency measures should not replicate the benefits of membership of the Union, nor the terms of any transition period, as provided for in the draft Withdrawal Agreement;
  • Contingency measures will in general be temporary in nature, and should in principle not go beyond the end of 2019;
  • Contingency measures will be adopted unilaterally by the European Union in pursuit of its interests and can therefore, in principle, be revoked by the European Union at any time;
  • Contingency measures must be adopted respecting the division of competences provided for by the Treaties as well as the principle of subsidiarity within the European Union;
  • National contingency measures must be compatible with EU law, including the international obligations of the Union; and
  • Contingency measures will not remedy delays that could have been avoided by preparedness measures and timely action by the relevant stakeholders.


As regards cleared derivatives, it appears that there might be risks to financial stability in a no deal scenario, deriving from a disorderly close out of positions of EU clearing members in the UK central counterparties. There might also be potential risks in relation to certain services provided to Union operators by UK central security depositories which cannot be replaced in the short-term. In these areas, the existing systems of equivalence provide appropriate tools, which can be swiftly deployed. The time remaining until 30 March 2019 should be used in this respect. Should the Commission need to act, it will only do so to the extent necessary to address financial stability risks arising from a withdrawal without an agreement, under strict conditionality and with limited duration. Should no agreement be in place, the Commission will adopt temporary and conditional equivalence decisions in order to ensure that there will be no disruption in central clearing and in depositaries services. These decisions will be complemented by recognition of UK-based infrastructures, which are therefore encouraged to pre-apply to the European Securities and Markets Authority (ESMA) for recognition.”


“Personal data

In the case of a no deal scenario, as of the withdrawal date, the transfer of personal data to the United Kingdom will become subject to the rules on international transfers in application of the General Data Protection Regulation (EU) 2016/679, Directive (EU) 2016/680 for the law enforcement sector and Regulation (EC) 45/200126 for the institutions and bodies of the European Union.

The General Data Protection Regulation, Directive 2016/680 and Regulation 45/2001 contain a broad toolbox for data transfers to third countries. This includes in particular the so-called ʻappropriate safeguardsʼ (e.g. the Commission's approved Standard Contractual Clauses, Binding Corporate Rules, administrative arrangements) that can be used both by the private sector and public authorities.

In addition, the three legislative acts mentioned above contain a number of derogations for specific situations that allow data transfers even in the absence of appropriate safeguards, for instance if the data subject provides explicit consent, for the performance of a contract, for exercise of legal claims or for important reasons of public interest. These are the same tools that are used with most countries in the world for which no adequacy decision exists.

In view of the options available under the legislative acts mentioned, the adoption of an adequacy decision is not part of the Commission's contingency planning.”


HMT has published draft text and an explanatory note of a statutory instrument, which will make amendments to the Money Laundering Regulations 2017; EU Funds Transfer Regulation and Oversight of Professional Body AML Supervision Regulations 2017, to be laid under the EU (Withdrawal) Act. The draft SI can be accessed here and the explanatory information can be accessed here.

Other publications from the RegZone Brexit news feed

AFME/Deutsches Aktieninstitut/EDMA Europe/FIA/ICMA/ISDA/Swiss Finance Council: Investment firm regulation – third country firm regime

The trade associations have written to EU policy-makers with their concerns over requirements being considered in the proposals for the investment firm review. The full publication can be accessed here.

HoC: E-petition relating to leaving the EU

This EU library briefing provides a debate pack a debate being held on 19 November 2018. The briefing paper can be accessed here.

HoC Procedure Committee: Motions under section 13(1) of the European Union (Withdrawal) Act 2018

This report sets out three potential options for the process for HoC to approve any negotiated withdrawal agreement between the UK and the EU. The full report can be accessed here.

EC: Regulation regarding EBA's location

Regulation (EU) 2018/1717 of the European Parliament and of the Council of 14 November 2018 amending Regulation (EU) No 1093/2010 as regards the location of the seat of EBA has been published in the Official Journal. The regulation can be accessed here.

The Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018/1184

Text of the SI and explanatory notes may be accessed via the following link.

HMT: Draft Interchange Fee (Amendment) (EU Exit) Regulations 2018

HMT has published the draft text of this SI, which makes amendments to the retained EU law relating to interchange fee regulation, to be laid under the EU (Withdrawal) Act, along with explanatory notes. These can be accessed here.


Text of PMQ on 14 November 2018 follows, including discussion of Brexit. The text can be accessed here.

ECB: Supervisory newsletter

The latest edition of ECB's supervisory newsletter has been published. Topics include: Brexit and an interview with Danièle Nouy. The newsletter can be accessed here.

Draft Social Entrepreneurship Funds (Amendment) (EU Exit) Regulations 2018

Draft Regulations laid before Parliament under paragraph 1(1) of Schedule 7 to the EU (Withdrawal) Act 2018, for approval by resolution of each House of Parliament. The draft SI can be accessed here.

Draft Venture Capital Funds (Amendment) (EU Exit) Regulations 2018

Draft Regulations laid before Parliament under paragraph 1(1) of Schedule 7 to the EU (Withdrawal) Act 2018, for approval by resolution of each House of Parliament. The draft SI can be accessed here.

Draft Payment Accounts (Amendment) (EU Exit) Regulations 2018

Draft Regulations laid before Parliament under paragraph 1(1) of Schedule 7 to the EU (Withdrawal) Act 2018, for approval by resolution of each House of Parliament. The draft SI can be accessed here.

EC: Brexit negotiations

This note of 13 November 2018 states that Michel Barnier has provided the EU27 ministers with an update, concluding that "intense negotiating efforts continue, but an agreement has not been reached yet". The note can be accessed here.

Draft Central Securities Depositories (Amendment) (EU Exit) Regulations 2018

Draft Regulations laid before Parliament under paragraph 1(1) of Schedule 7 to the EU (Withdrawal) Act 2018, for approval by resolution of each House of Parliament. The draft SI can be accessed here.

CMS RegZone

publishes weekly updates (available via email, on-line and via Twitter) on Brexit developments for financial services firms. These provide analysis and commentary on significant developments during the week in question. A daily digest of Brexit news (without analysis or commentary) is also available by email hereherehere and online via the RZ news wizard (both of these can be filtered using the Brexit topic). Links to publications are contained in each update; publications released before the updates commenced in April 2018 can be found in a bibliography . CMS RegZone publication ‘Where we stand’ provides an overview of the current position in a single report; this is updated regularly to take account of the key developments from the weekly updates.