On 10 December, the European Union Commission issued a link by e-mail https://ec.europa.eu/info/european-union-and-united-kingdom-forging-new-partnership/future-partnership/getting-ready-end-transition-period to a communication aimed at publicising and refreshing memory on contingency planning for No Deal at the end of the Brexit Transitional Period on 31 December 2020.
The communication document (see the attached Getting ready for the end of the transition period _ European Commission_101220) contained links to 91 guidance notes aimed at various aspects of EU-UK economic interaction ranging from aviation to food safety to Waste shipments etc. The guidance dates back to July 2020.
Some of the guidance is relevant to financial services firms, depending on which sector(s) of the market the firms operate within. The attached document contains links to 11 English language pdf documents providing more specific guidance on the following areas relevant to financial services firms:
- Asset Management
- Banking & Payment Services
- Credit Rating Agencies
- Data Protection
- emissions trading
- financial instruments (MiFID)
- Occupational pension schemes
- Post trade financial services (trade reporting and settlement)
There is no new information contained in these guidance documents. However, we can see the EU position on these matters first hand and in writing.
The situation remains that from 1 January 2021equivalence provisions agreed between ESMA, EBA, EIOPA and FCA will come into force to permit continuity in wholesale markets infrastructure, payment services and some aspects of reinsurance. This will permit completion and settlement of cross-border securities and derivatives trades, trade reporting for such transactions and cross-border payments between the UK and EU/EEA states. There is also a limited equivalence provision for reinsurance busines. The cross-border services and /or branch passports that permitted financial services firms to do business on a cross-border basis without the need to be authorised by the regulator in each state where it did business, will end and will not be replaced. There will be no equivalence provision in any other area of financial services.
The guidance has been re-issued in the context of the very real possibility that the UK and the EU cannot reach an outline agreement on future trade deal by 31 December 2020. However, it is worthwhile observing that as the trade talks are focused almost exclusively on trade in goods, produce and minerals (ie, anything that can be boxed/packaged and shipped). Financial services will not form part of any trade deal. Nothing is likely to change for the financial services sector even if a trade deal is agreed.