Brexit and Financial Services: 2021 Update

The UK and EU finalised the Trade and Cooperation Agreement (“TCA”) that governs their future trading and security relationship on 24 December 2020. The TCA offers minimal commitments on financial services and even excludes financial services from some general protections that otherwise apply under the TCA. At the same time, in a non-binding declaration, the UK and EU agreed to enter into a memorandum of understanding by March 2021 on the establishment of a cooperation framework. Continue reading

“STABILITY AND CONSISTENCY”: PRA SETS OUT PROPOSALS FOR POST-BREXIT APPROACH TO INTERNATIONAL BANKS

The PRA has published a consultation paper (CP2/21) setting out proposals for its updated approach to supervising the UK activities of banks and PRA authorised investment firms that are headquartered outside of the UK or part of a non-UK group. The consultation paper includes a draft supervisory statement to supersede the existing PRA Supervisory Statement 1/18 (the PRA’s current supervisory statement on its approach to supervising international banks).

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New year, new UK sanctions regime

Upon the end of the Brexit transition period at 11pm on 31 December 2020, the UK ceased to implement EU sanctions. UK sanctions are now in force under the UK’s domestic sanctions regime, the framework for which is contained in the Sanctions and Money Laundering Act 2018 (“SAMLA”). The UK has introduced regulations under SAMLA which implement UK versions of the EU sanctions regimes that were in force pre-Brexit, although the new UK sanctions are not identical to the EU sanctions in all respects. Continue reading

EU introduces global human rights sanctions regime

On 7 December 2020, the Council of the EU announced the introduction of a new global human rights sanctions regime, as part the EU Action Plan on Human Rights and Democracy 2020-2024.

The new regime introduces a framework to impose a travel ban and asset freeze on individuals and entities identified as responsible for, involved in or associated with, serious human rights violations and abuses worldwide.

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ESMA confirms EU’s hardline stance to MiFIR Derivatives Trading Obligation post-Brexit

In a frustrating twist to the dangerously slow-moving narrative on cross-border financial market access post- Brexit, ESMA yesterday (25 November) issued a public statement confirming the EU’s hardline stance to the derivatives trading obligation (DTO) under MiFIR.  The DTO requires EU investment firms to trade certain classes of derivatives only on EU-authorised trading venues – or third country trading venues certified by the European Commission as equivalent. No such equivalence decision has been made or signalled by the EU for purposes of the DTO – and ESMA’s latest statement declines to offer any forbearance or similar relief to EU firms currently using UK venues for this purpose.

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“Keep it Strong and Simple”: PRA speech on proposals for new post-Brexit prudential regime

On 12 November, Sam Woods (CEO of the PRA) used his Mansion House speech (the Speech) to discuss the merits of introducing a new “strong and simple” regime of prudential regulation for small banks and building societies in the wake of the UK’s exit from the EU, as well as providing some general commentary on the PRA’s post-Brexit approach.

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UK Post-Brexit Reform: HM Treasury consults on the Future Regulatory Framework for EU Exit

HM Treasury (“HMT”) has published a consultation launching the second phase of the Future Regulatory Framework (FRF) Review (the “Review”). The purpose of the Review, which began in 2019, is to explore how the UK’s regulatory framework for financial services needs to change in order to be fit for the future, particularly in light of the UK’s exit from the EU. The aim is to achieve an agile and coherent approach to financial services regulation in the UK, with appropriate democratic policy input to support “a stable, innovative and world leading FS sector”.

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Public consultation on the review of the AIFMD is published

To some of us it feels like just yesterday that the asset management industry was grappling with the legislative powers in the EU to make sense of the early drafts of the AIFMD. And yet here we are again, as the European Commission yesterday published its public consultation on the review of the AIFMD (the “Consultation”). The Consultation marks the Commission’s first deep engagement with the public on the road to what could end up being a significant reform and it brings up again some of the issues that vexed engagement during the introduction of the AIFMD.

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UK Post-Brexit reform: Financial Services Bill introduced

 Background

On 21 October, the Financial Services Bill (FS Bill) was introduced to Parliament.  Forming part of the Government’s wider Future Regulatory Framework (FRF) initiative, the FS Bill is the first step towards HM Government’s objective of maintaining the competitive position of the UK financial services industry and capitalising on new opportunities following the end of the Brexit transitional period.

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