Brexit and an update on financial services regulation
On 16th September 2019, Andrew Bailey, the Chief Executive of the UK Financial Conduct Authority ( "FCA") , gave an important "state of the nation" speech at Bloomberg, London, updating the public on preparations that both the UK and EU have been making to deal with Brexit, whatever form Brexit takes but particularly in a "no deal" situation.
The summarised highlights to the official transcript of the speech in a way say it all:-
>>> Financial sector preparations for a no deal Brexit have advanced this year but there is no room for complacency;
>>> There are a number of outstanding issues, which require further action whether in the UK or in the EU;
>>> THE FCA will take a "pragmatic approach" to particular issues as they arise with a view to maintaining market integrity and protecting consumers and market users.
Mr Bailey highlighted recent achievements in the UK's financial sector preparations - working closely with the Treasury and the Bank of England , the FCA has promoted over 50 statutory instruments to "onshore to the UK" EU financial services legislation; the FCA will make use of the so-called Temporary Transitional Power to delay or phase changes to UK regulatory requirements as a result of the on-shoring of EU financial services legislation; a number of new co-operation agreements have been agreed with the EU markets, insurance and banking authorities which will take effect in a "no deal" outcome; and the FCA has been doing extensive preparatory work to take over certain functions formerly administered in respect of the UK at EU level , such as the regulation of Credit Rating Agencies and Trade Repositories and the enforcement of MIFID2- type obligations in the UK.
Mr Bailey then named 7 financial sector areas where further work clearly has to be done to prepare for a "no deal" Brexit - the Share Trading Obligation ; the Derivatives Trading Obligation; Clearing ; Uncleared derivatives; Data exchange; Contract "repapering"; Retail Financial Services preparation - all highly technical subjects but important in the financial services arena.
Finally, Mr Bailey focused on " next steps", including the necessity of agreeing "equivalent" - type arrangements with the EU authorities to ensure the continuity of financial services operations, so far as possible, within the UK-EU area.
On the same day as Mr Bailey's speech, the UK Government's Minister for the City of London, John Glen, was reported as expressing the hope that financial services firms were "as prepared as they can be " for a no-deal Brexit.
"Cautious optimism" seems to be the message that is coming out of the UK Government but perhaps the final words can be left to Andrew Bailey:-
"So, in short, and to end, we have made considerable progress, but we do not underestimate the task ahead."
