BoE Releases Package on Approach to Financial Legislation Under Brexit
BoE published a communications package setting out the regulatory and supervisory approach in relation to its work on withdrawal of the UK from EU. The package addresses changes to the rules and binding technical standards that are arising out of the EU withdrawal of the UK. It also sets out further guidance on the process for authorization and recognition for incoming European Economic Area firms and non-UK financial market infrastructures (FMIs), including the temporary permissions and recognition regimes.
The package does not reflect any policy changes other than those related to EU withdrawal and builds on previous communications to firms on their preparations around EU withdrawal. The packages is relevant to all firms authorized and regulated by PRA, European Economic Area firms undertaking cross-border activities into the UK from the rest of the EU, UK FMIs regulated by BoE, and non-UK central counterparties (CCPs) and central securities depositories (CSDs) providing cross-border services into the UK. The package includes the following:
- “Dear CEO” letters from Sam Woods to all firms authorized and regulated by PRA and European Economic Area firms undertaking cross-border activities into the UK from the rest of EU via passporting, along with letters from Jon Cunliffe to non-UK CCPs and non-UK CSDs updating them on the approach of BoE to their preparations for EU withdrawal.
- A joint Bank/PRA consultation paper that sets out the general approach of BoE to making changes to rules and binding technical standards, including the proposed use of transitional powers. It also contains a draft Supervisory Statement indicating the expectations of firms and FMIs in relation to EU Guidelines and Recommendations.
- A PRA consultation paper that sets out the key changes to PRA rules and relevant binding technical standards. The consultation covers changes related to EU legislation where HM Treasury has either published its policy intention, published the related legislation in draft, or has laid it before Parliament.
- An FMI consultation paper that sets out the key changes to FMI-related binding technical standards and rules. The consultation also contains a draft Supervisory Statement on the expectations of FMIs in relation to existing non-binding domestic material.
- A Resolution consultation paper that sets out changes to binding technical standards in relation to resolution. It also proposes how firms should interpret the existing BoE Statements of Policy on resolution in light of any deficiencies arising from the withdrawal of the UK from EU.
In addition, the BoE website will have section that brings together communications to firms on EU withdrawal. This section will include Information for firms on the Temporary Permissions Regime (TPR), including eligibility, entry and exit from the regime, and the rules expected to apply to firms in the TPR. It will also provide information on the process for incoming FMIs, including further information for non-UK CCPs on the temporary recognition regime and the transitional process for non-UK CSDs.
The position remains that in all but certain limited exceptions—as set out in this announcement—UK regulated firms do not need to take action now to implement changes in UK law arising from the withdrawal of UK by March 2019. This acts as a contingency for a scenario in which the implementation period, which has been agreed in principle as part of the Withdrawal Agreement of the UK with EU, does not take effect on March 29, 2019.
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Keywords: Europe, UK, Banking, Insurance, Securities, PMI, FMI, Brexit, Withdrawal Agreement, EU, BoE
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