PIMFA Brexit Bulletin - 24th October 2019

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Brexit Bulletin - 24th October 2019 Dear Nigel, Welcome to the PIMFA Brexit Bulletin, our regular update on the roller-coaster of Brexit news and developments.

All the material contained in this Brexit Bulletin is for PIMFA members only and members must log in to access these guides, web pages, documents etc.

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What is PIMFA Working on ahead of Brexit

A Guide to the Implementation PIMFA Brexit/EU Webpage of MiFID in EU Member StatesOn the PIMFA website, we have an entire As part of our work to assist member firms in section exploring the consequences of Brexit in meeting the challenges posed by Brexit,

more detail.

PIMFA in collaboration with BRP, have created 

a guide to the implementation of the Markets in

Keep track of the latest Brexit negotiations

Financial Instruments Directive (MiFID) and 

Regulation (MiFIR) in all 27 other EU member

Read about Post-Brexit Financial Services Regulations

states. 

Keep up with the latest PIMFA News here

The guide is available to read here.

Read more

PIMFA member log in area Remind me of my password / Register for a new account

Find out more

Latest Brexit News Brexit and the FCA In this week’s PIMFA Fortnightly News Bulletin we stated that the “FCA has recently said Transaction Reporting will change immediately upon Brexit, even if there is a deal on October 31st….”. The phrase should have read: “The FCA has recently said Transaction Reporting will change immediately upon Brexit in a no-deal situation…..”

The revised complete paragraph is as follows:

“The FCA has recently said Transaction Reporting will change immediately upon Brexit in a no-deal situation. Firms which currently report to the European Securities and Markets Authority will instead have to report trades to UK authorities on the first day after Brexit. To smooth the transition, the FCA has given derivatives traders and FCA regulated trade repositories a grace period to comply with this requirement.

If the UK leaves the EU on 31 October without a deal, FCA-registered trade repositories must ensure the migration of outstanding trades and historic EMIR data, and that the details of any trades newly concluded, terminated or modified by UK reporting counterparties on 1, 2, and 3 November 2019, are embedded in their systems. These need to be available for UK authorities by 4 November 2019.

UK reporting counter-parties should ensure details of derivative transactions that are concluded, terminated and/or modified on 30 and 31 October 2019 which cannot be reported before the point of exit, are reported to an FCA-registered TR by no later than 4 November 2019.

But if the deal now being debated in the UK Parliament, and which has been approved in principle by a Parliamentary majority at first reading, goes through, the UK will exit the EU in a deal situation. In this case there will be no change to current practice until the end of December 2020 at the earliest, whether or not the UK leaves on 31 October. This is because the transition period currently embedded in that deal will apply until the end of 2020. Under this agreement the UK will behave as if still in the EU, except for not having seats at the EU’s negotiating and policy decision-making tables in Brussels and elsewhere, until 31 December 2020, with options to extend this period if desired.

The full FCA statement can be found here.�

Brexit: Where are we now?

Meanwhile all this raises the question about what is happening to Brexit? At the time of writing the lack of clarity remains as opaque as ever. EU 27 leaders are considering the UK request for an extension beyond 31 October but their decision is unknown and may not be available until the end of this week. However, a 3 month extension seems the most probable outcome.

In the UK, despite MPs voting on 22 October in favour of the Withdrawal Agreement Bill (WAB) in principle with a majority of 30, the Government lost the vote on the programme motion (timetable for the Bill) by 322 votes to 308, meaning a Brexit delay is almost certain.

It is now hard to see a route to Brexit by 31st October.

However, the in-principle vote for the WAB will be seen as a portentous achievement by the Government, not least because of the improbable coalition they brought together to achieve it. This included all of the current Conservative Party, including the 28 ‘Spartans’ who voted down Theresa May’s deal three times and most of the 21 ‘independent Conservative’ MPs. There were also 19 Labour MPs voting for the deal. Party disciplinary issues for these Parliamentarians will be a matter for Labour, since without them the Tory Government would have been defeated. So such a majority may not recur.

Now, as the EU deliberates on an extension, the Government must decide whether to advance the deal further through Parliament or to seek an election to secure an outright majority. After gaining a 30 majority vote for the second reading (reasonable given a hung parliament) the balance may well move in favour of trying to get the WAB through Parliament on a modified timetable. But the significant Government lead in national opinion polling may alternatively incentivise a decision to hold an election to enable getting the current deal through without amendments.

If an election is chosen, it is still unclear whether the Government could carry the twothirds majority required under the Fixed Terms Parliament Act to call one. While the Labour Party’s official position is to support a fresh General Election once ‘no deal has been taken off the table’, there appear to be differing views on whether to back one right now. And there remain internal divisions on whether a 2nd referendum should come before any such election. Meanwhile the Liberal Democrats and SNP have both indicated a favourable approach to an election now.

Against this background the current PIMFA assessment is: •

The UK is unlikely to leave the EU on 31 October;

•

A no-deal is now less likely than a deal, whether a course through Parliament of the

WAB continues to be steered in an extended timetable, or whether an election is chosen; •

The first of these options could lead to numerous amendments which may include

those in favour of remaining in the customs union, staying close to the single market, and a second referendum; •

So the character of the deal may be altered significantly if this course is followed;

•

The Government remains in a substantial minority and would find it difficult oppose

many of these amendments; •

So it may call a General Election to trump all Parliamentary procedure and gain a

majority; •

If this happens the amendments will be overturned and the deal as is will be returned

to the new Parliament by the new Government in the form of the WAB and will probably be driven through by early next year; •

In all circumstances so far, the transition element of the WAB has remained unaffected

by debate or amendment, and is likely to persist; if so, it may go longer than 31 December 2020 on the grounds that it was originally designed for Brexit on 29 March this year and the delays now render it unfit for purpose which, among other things, was to provide time to negotiate a long-term UK/EU free trade agreement; •

PIMFA firms should continue to plan on Brexit occurring in a timescale to be finalised

and on the assumption that the no-deal worst case scenario could still apply, even if it is less probable.

•

But if a deal is ratified and legislated for, transition will mean that firms need not make

any immediate changes, regardless of the date of EU exit.

Finally, watch this space…!

Brexit in the News Brexit bill 'in limbo' as MPs reject timetable Boris Johnson has hit the pause button on his Brexit legislation after MPs rejected his plan to get it through the Commons in three days.

PM to push for election if EU agrees three-month delay The move would need the backing of Parliament, and opposition MPs have previously ruled out holding one until the prospect of no-deal on 31 October was ruled out.

FCA sets out latest expectations for firms on Brexit The FCA and regulated firms have been taking steps to prepare in the event the UK leaves the EU on 31 October 2019 without a deal. Recently, the FCA issued an update on steps certain firms need to take.

Brexit delay in EU hands as Boris Johnson mulls General Election As we wait for the EU to decide on an extension to the Brexit process, Boris Johnson must decide whether to come good on his pledge to call an election rather than stomach a lengthy delay.

Brexit: What happens now?

Boris Johnson has agreed a revised Brexit deal with the EU and MPs have voted to allow the government's bill on it to go forward to the next stage in the parliamentary process.

But they have rejected the rapid timetable which would only have allowed three days of debate in the House of Commons.

Mr Johnson wanted the law passed quickly so Brexit on the terms of his new deal could happen on 31 October. It will now be almost impossible to meet that deadline.

The prime minister had said that he might withdraw the bill and seek to hold an early general election instead. But immediately after the vote on the timetable for the bill he said it would be paused and that he would speak to EU leaders.

Latest Brexit Industry Events City & Financial: The 5th UK Financial Services Beyond BREXIT Summit Monday 28th October, 2019 Royal Garden Hotel, 2 -24 Kensington High Street, London W8 4 PT The objective of this summit, which is being held shortly before the UK is due to leave the EU on 31st October, either with or without a deal, is to look beyond BREXIT and examine the opportunities that lie ahead for the City and the wider FS industry.

We are delighted that John Glen MP, Economic Secretary to the Treasury and City Minister, and Nausicaa Delfas, Executive Director of International and Member of the

Executive Committee, Financial Conduct Authority, will both be delivering keynote addresses at the summit.

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