Draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment etc and Transitional Provision) (EU Exit) (No. 2) Regulations 2019 laid before Parliament
On 25 July, the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment etc. and Transitional Provision) (EU Exit) (No. 2) Regulations 2019 were laid before Parliament, together with a draft explanatory memorandum. The Regulations have been made to address deficiencies in retained EU law in EMIR, as amended by the EMIR Refit Regulation, which came into force on 17 June. As the EMIR Refit Regulation has now amended EMIR, this updated version will form part of UK law on exit day. The instrument makes amendments in relation to: (i) transfer of functions; (ii) clearing obligation suspension; (iii) pension fund clearing exemption; and (iv) intragroup transactions. Part 1 and 3 of the Regulations come into force on the day after the day on which the Regulations are made. Parts 2 and 4 come into force on exit day.
BoE and PRA consultation paper on changes following the extension of Article 50
On 25 July, the PRA and the BoE published a consultation paper (CP18/19) on further amendments to financial services legislation following the extension of the Brexit deadline to 31 October. On 18 April, the BoE and PRA published their amendments to financial services legislation under the European Union (Withdrawal) Act 2018 (EUWA), which included final EU Exit Instruments covering changes to PRA rules, FMI rules and BTS. These EU Exit Instruments have, with limited exceptions, an effective date of ‘exit day’ as defined in the EUWA. As such, in light of the extension of Article 50, some minor amendments are required to the BoE’s and PRA’s EU Exit Instruments. CP18/19 is split into two sections. Section A contains an update on how the BoE and PRA intend to use their temporary transitional powers , and Section B contains proposals to fix deficiencies arising from the UK's withdrawal from the EU and for consequential changes in light of the extension of the Article 50 period. Section B comprises of two parts. Part 1 sets out the PRA's proposals relating to the PRA Rulebook and BTS within the PRA's remit that will be onshored in UK law. Part 2 sets out the BoE's proposals in relation to BTS under the CSDR. The deadline for comments is 18 September.
FCA announces extension to its use of the temporary transitional power
On 25 July, the FCA confirmed its intention to extend the proposed duration of the directions issued under the temporary transitional power to 31 December 2020, to reflect the extension of Article 50. The temporary transitional power is intended to minimise disruption for firms and other regulated entities if the UK leaves the EU without a deal. In February, the FCA announced that it would not be granting transitional relief in certain specific areas, and confirms that in these areas, it still expects firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by exit day. The following firms or persons should continue their preparations to comply with the changes: (i) firms subject to the MiFID II transaction reporting regime, and connected persons; (ii) firms subject to reporting obligations under EMIR; (iii) EEA issuers that have securities traded or admitted to trading on UK markets; (iv) investment firms subject to the BRRD and that have liabilities governed by the law of an EEA State; (v) EEA firms intending to use the market-making exemption under the Short Selling Regulation; (vi) firms intending to use credit ratings issued or endorsed by FCA-registered credit ratings agencies after exit day; and (vii) UK originators, sponsors, or securitisation special purpose entities (SSPEs) of securitisations they wish to be considered simple, transparent, and standardised under the Securitisation Regulation. The FCA will publish further information before exit day on how firms should comply with post-exit rules.