Brexit update for financial services firms from 2 November 2019 to 15 November 2019


2. CMS Update Guides to passporting.

We are please to issue our updated Guide to Passporting: Rules on Marketing Alternative Investment Funds in Europe, Guide to Passporting: Rules on Marketing Undertakings for Collective Investment in Transferable Securities in Europe and Guide to Private Placement of Funds: Accessing European Investors post- AIFMD. Full details are available on our website and each guide can be accessed by clicking the relevant link.

3. FCA: Statement on MiFID II inducements and research

FCA has welcomed SEC’s extension of no-action relief relating to MiFID inducements and research provisions. SEC has announced an extension of the SEC staff “no action letter”, which addresses the potential conflict between US regulation and MiFID II, until 3 July 2023 (the existing relief was due to expire on 3 July 2020). During the remainder of the current period and the extended period of the no-action relief, broker-dealers subject to the US regime may receive payments for unbundled research from firms subject to MiFID II or equivalent rules of EU member states without being considered an investment adviser under US law. This will also apply to UK firms in the event of Brexit before or during the extended period. The full FCA text can eb accessed through the following link.

4. ESMA: EMIR 2.2 – technical advice

ESMA published three sets of technical advice to the EC concerning third-country central counterparties under EMIR 2.2. These cover comparable compliance, fees and tiering criteria.

5. FMLC: Securitisation Regulation

FMLC has published the text of a letter it has sent to the EC with regard to Article 5(1)(e) of the Securitisation Regulation which raises concerns that the words “where applicable” in this Article are a source of significant legal uncertainty as to whether Article 7 applies indirectly to non-EU transactions. FMLC calls on the EC to issue guidance on the approach to the due diligence assessments of transactions involving third country entities in order to promote legal certainty in this area.

6. ISDA: Joint trade associations letter on CCP recognition and equivalence

The text of a letter from ISDA and 12 other trade associations to the EC follows. The letter requests the EC to confirm that it intends to extend the temporary equivalence for UK CCPs until the new framework for recognition of non-EU CCPs under EMIR 2.2 has become applicable and ESMA has completed its review of existing recognition decisions.

7. HMT: The Prospectus Directive and Transparency Directive Equivalence (Variation) Directions 2019

HMT has published these Directions, which come into effect on exit day.

8. FMLC: Issues of legal uncertainty arising in the context of the withdrawal of the UK from the EU – the provision and application of third country regimes in EU legislation

FMLC has now published an addendum to its July 2017 report, which provides updates in relation to industry sectors.

‘….The uncertainties highlighted in the 2017 Report continue to paint a daunting picture for U.K. market participants who have been, and would like to continue, providing services into the E.U. and the risk of a “cliff edge” continues to present a substantial danger of market disruption and of litigation in relation to legacy business.

5.3. The FMLC has previously recommended prioritising the negotiation of transitional provisions and has also identified actions which financial markets participants might take themselves to ameliorate uncertainty. The FMLC does note, however, that as the extended Brexit deadline of 31 January 2020 is now only about three months away— with the possibility of “no-deal” Brexit still remaining as considered in section one of this paper—there may not be sufficient time to put in place more significant transitional provisions before then or for market participants to take (if they haven’t already taken) any necessary actions or to complete any actions that have been taken…’

Other publications from the RegZone Brexit news feed

ECB: Banking supervision newsletter

The newsletter is comprised of a number of articles which may be downloaded individually via the following link. They include: Brexit and the banking sector; AI and banking supervision; capital requirements and fintech.

Department for Exiting the EU: Reports on Brexit negotiations required by European Union (Withdrawal) Act 2018 and European Union (Withdrawal) (No. 2) Act 2019

The Government has published two documents as required by section 13(4) of the European Union (Withdrawal) Act 2018 and section 2(1) of the European Union (Withdrawal) (No.2) Act 2019. The first of these emphasises that the Government has no plans to have further negotiations and the Council decision on the extension excludes any re-opening of the Withdrawal Agreement.

FCA: Board minutes

FCA has now published the minutes of its 26 September 2019 board meeting. Topics include: Brexit; PPI; GI pricing practices; FCA’s approach to mini-bonds and related products.

HoL Constitution Committee: EU (Withdrawal Agreement) Bill – interim report

The Committee has published an interim report on the constitutional issues in the Bill which discusses, amongst other matters, he Withdrawal Agreement’s implementation period; the relationship to EU law both during the implementation period and for the life of the Withdrawal Agreement; and parliamentary sovereignty.

HoC Scrutiny Committee: Post-Brexit scrutiny of EU law and policy

The Committee has published a report containing links to transcripts and other written evidence in relation to this inquiry. It urges any successor Committee appointed in the next Parliament to revisit the issues it has been concerned with in the inquiry.

HoC: Planning for a no deal Brexit

This HoC Library briefing paper provides an overview of Government and EU preparations for a no deal Brexit, and of recent reports analysing the possible impact of this outcome.

ESMA: Statement by Steven Maijoor

The text of Steven Maijoor’s statement to the European Parliament on 4 November 2019 follows, in which he discusses ESMA’s work over the past year, including in relation to Brexit. The annex to the statement is available here.