BoE Proposes Minor Amendments Following Extension of Period for Brexit
BoE published a consultation paper (CP18/19) on the minor amendments that are needed to EU Exit Instruments of BoE and PRA, following the extension of the Article 50 period (announced on April 10, 2019) and the consequent change of the exit day (in the EU Withdrawal Act 2018) to October 31, 2019. CP18/19 follows the previous consultations on amending financial services legislation under the EU Withdrawal Act 2018. BoE and PRA continue to follow the approach set out in CP25/18 on the BoE approach to amending financial services legislation under the EU Withdrawal Act 2018. This consultation closes on September 18, 2019. Responses to CP18/19 will be shared with FCA.
CP18/19 contains following two sections. Section A provides an update on BoE's and PRA’s intended use of the temporary transitional power provided for in the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (FSMA SI). Appendices 1 and 2 contain draft PRA and BoE transitional directions, respectively. BoE and PRA intend to publish the final directions and guidance ahead of exit day. Section B includes BoE and PRA consultation with proposals to fix deficiencies arising from the withdrawal of UK from EU and make consequential changes in light of the extension to the Article 50 period. Section B is split into two parts:
- Part 1 sets out proposals by PRA in relation to the PRA Rulebook and Binding Technical Standards within the PRA remit that will be retained, or onshored, in UK law. Appendix 3 contains draft Technical Standards (Capital Requirements) (EU Exit) (No. 4) Instrument, appendix 4 contains draft Technical Standards (European Market Infrastructure) (EU Exit) (No. 4) Instrument, appendix 5 contains draft Technical Standards (Solvency II Directive) (EU Exit) (No.2) Instrument, and appendix 6 contains the draft PRA Rulebook: (EU Exit) (No. 2) Instrument. The draft PRA Rulebook EU Exit Instrument in Appendix 6 shows all proposed changes to the PRA Rulebook: (EU Exit) Instrument 2019 that were originally published on April 18, 2019. The further changes being consulted on in CP18/19 have been highlighted in yellow in Appendix 6.
- Part 2 sets out the proposals by BoE, as the financial market infrastructure (FMI) competent authority, in relation to the Binding Technical Standards under the Central Securities Depositories Regulation (CSDR). Appendix 7 provides draft Technical Standards (Central Securities Depositories) (Amendment etc.) (EU Exit) (No.2) Instrument.
CP18/19 is relevant to all firms authorized and regulated by PRA, including those that expect to have a deemed permission under the temporary permissions regime (TPR) or Financial Services Contracts Regime (FSCR), or that seek to apply for PRA authorization in the future. It is also relevant to FMIs recognized and supervised by BoE, including those that expect to have a deemed recognition under the temporary recognition regime. The changes proposed in CP18/19 would take effect on October 31, 2019 (exit day) only in the event that there is no implementation period. If the withdrawal agreement between UK and EU is ratified and the implementation period commences on exit day, the proposed changes would take effect after the implementation period. Further modifications to PRA and BoE rules and onshored Binding Technical Standards may be required to reflect any arrangements made between UK and EU as part of their future relationship.
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Comment Due Date: September 18, 2019
Keywords: Europe, UK, Banking, Insurance, Securities, Brexit, CP 18/19, PRA Rulebook, Binding Technical Standards, Exit Instruments, FMI, CSDR, CP 25/18, PRA, FCA, BoE
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