|Simon Lovegrove:||Hello everyone and welcome to our latest Financial Services and Brexit video. In this video we are going to take a brief look at Consultation Paper 18/28 which sets out the regulator’s proposals for changes to its handbook in light of Brexit. It also deals with some proposed amendments to binding technical standards to which the FCA has responsibility for. It’s Important to remember that the proposals in CP18/28 are part of the FCA’s contingency planning for a "no deal" Brexit scenario. Jonathan let’s begin, let’s take a step back. The overall approach that the FCA has taken, there’s a baseline approach treating member states as third country firms but it’s not quite as simple as that.|
|Jonathan Herbst:||No that’s right. I mean, their starting point is that where you see EU that becomes UK and EU becomes third country like everything else. But there are a number of exceptions, so to give a couple of them; stock lending exposures for example, they’ll continue to permit EEA as if it was the current regulation, same with UCIT’s requirements. But that is not universal, so for example on RegCap it’s CRR exposures. They are at least talking about a starting point of EU becoming third country exposures but they’re going to consult separately on that. So, very complicated, one needs to work through exactly what they’ve done in detail.|
|Simon Lovegrove:||Jonathan, a few things to cover on the binding technical standards, but for the moment let’s just focus on MiFiD 2. What are your thoughts on what the FCA is saying in CP18/28?|
|Jonathan Herbst:||The starting point is most of the regulatory technical standards and the ITS will be incorporated but there are a couple of carve-outs from that. The first one actually is quite interesting is on transparency. Pre and post-trade they are going to think, they are going to consult in due course around the extent to which the calculations will be EU-wide calculations or UK calculations, that seems very sensible. The second area is in relation to applications. I mean, clearly all the stuff around applications to ESMA all of that falls away as those applications will be UK. The third example is in relation to corporation requirements between member state competent authorities which obviously fall away. But I think for the vast majority of MifiD and indeed the other technical standards, they will be incorporating those into English Law. But as always, the devil will be in the detail, one needs to read every one carefully to check they’ve done what they say they’re going to do in the tin.|
|Simon Lovegrove:||And Jonathan, finally Level 3 material. There’s been a lot of talk about this but there’s some proposed guidance now from the FCA?|
|Jonathan Herbst:||So the basic starting point is that they are going to be incorporated in and as at the moment you will have regard to it. It is an interesting point to have regard to about its current legal status but I think they are intending it to be broadly binding – let’s call it that. In relation to that, the material that is there at the moment – now, just when I say at the moment that includes, let’s see what happens, definitely to the end of March next year and if there’s a transitional period, to the end of the transitional. There’s a different question around Level 3 technical standards that will be agreed after the final exit date, and that is something that remains to be seen. There is a throw away couple of lines in the paper on that, let’s see how that plays out. I think is where you’re going to begin to see possible divergence but I think that’s all to play for in terms of the detail.|
|Simon Lovegrove:||Thanks Jonathan, that concludes this financial services video, goodbye.|
About Brexit Broadcast
Ahead of Britain’s impending departure from the EU on March 29, 2019, our financial services team will be updating you on the latest developments and exploring the implications of Brexit for the industry.
Brexit Broadcast: FCA consults on changes to the Handbook and BTS (October 2018)
Jonathan Herbst and Simon Lovegrove discuss the FCA’s proposed changes to its Handbook in Consultation Paper 18/28.
Brexit Broadcast: Financial market infrastructure (September 2018)
Hannah Meakin, Jonathan Herbst and Simon Lovegrove discuss financial market infrastructure and Brexit.
Brexit Broadcast: UK Government’s White Paper (July 2018)
Simon Lovegrove and Jonathan Herbst discuss the Government’s White Paper on the future UK/EU relationship.
|Brexit Broadcast: Brexit and financial services - Germany (June 2018)
Martin Krause, a partner in our Frankfurt office, provides a view on Brexit from Germany.
|Brexit Broadcast: Brexit and financial services - France (June 2018)
Roberto Cristofolini, a partner in our Paris office, provides a view on Brexit from France.
|Brexit Broadcast: Focus on asset managers (June 2018)
Jonathan Herbst and Imogen Garner discuss the areas that the asset management industry is focusing on in relation to Brexit.
|Brexit Broadcast: Transitional agreement (April 2018)
Simon Lovegrove is joined by Jonathan Herbst and Peter Snowdon to discuss the transitional agreement.
|Brexit Broadcast: Update on PRA branch authorisations (January 2018)
Peter Snowdon and Simon Lovegrove take a look at the PRA's recent consultation paper on branch authorisations, CP29/17, and also its Dear CEO letter.
|Brexit Broadcast: Latest developments (January 2018)
A look at what we have been seeing in the market and what may be happening in the next few weeks.
|Brexit Broadcast: Brexit update – Financial Services (October 2017)
Simon Lovegrove is joined by Jonathan Herbst, our global head of financial services who has been working with a number of firms on Brexit.
|Brexit Broadcast: Brexit and Article 50 (March 2017)
The Prime Minister delivered the letter to the European Authorities in relation to the Article 50 triggering of Brexit.
|Brexit Broadcast: Brexit update – Financial Services (February 2017)
We discuss the market reaction to our new paper on equivalence that was commissioned by the Financial Services Negotiation Forum, as well as other Brexit-related matters affecting financial services.
|Brexit Broadcast: Looking forward to 2017: Brexit and Trump (December 2016)
With 2017 being just around the corner, and with the possibility that the year will be a defining moment for the financial services industry, we thought we would ...
|Brexit Broadcast: Brexit update – Financial Services (September 2016)
In this video we are going to do a short update on Brexit.
|Brexit Broadcast: What does the leave vote mean for financial services firms? (June 2016)
The UK has voted to leave the EU. What does that mean in practice to you as a GC or as senior management in a regulated firm?
|Brexit Broadcast: Brexit basics (May 2016)
On June 23, the UK holds its referendum on EU membership. We discuss the implications of possible outcomes.
|Brexit Broadcast: The potential legal implications of a Brexit (March 2016)
The upcoming EU referendum and the continuing uncertainty as to whether the UK will choose to stay in or leave the EU is clearly a concern for our clients with business interests in the UK and Europe.