Does the Post-Brexit Deal affect your EMIR/MIFIR/SFTR reporting?

Post-Brexit-Changes

The United Kingdom (UK) finally clinched a narrow Brexit trade deal with the European Union (EU) on 24 December 2020 before exiting the EU on New Year’s Eve. The post-Brexit trade deal was signed on 30 December 2020 and officially came into effect from 23:00 GMT the following day.

The Deal’s Four Key Points

1. Free, Fair and Sustainable Trade

  • trade in goods, including customs and regulatory co-operation
  • services and investment
  • digital trade, intellectual property and public procurement
  • rules for fair competition and sustainability

2. Connectivity, Sustainability and Shared Opportunities

  • transport
  • energy
  • fisheries and natural resources
  • social security coordination
  • union programmes
  • thematic cooperation

3. Citizens’ Security

  • law enforcement and judicial cooperation in criminal matters
  • protection of fundamental rights and personal data
  • data exchange
  • anti-money laundering

4. New EU-UK Governance Framework for a Lasting Cooperation

  • shared values and essential elements
  • partnership council
  • dispute settlement, enforcement and sanctions mechanisms
  • periodic reviews

Does the post-Brexit deal affect your EMIR, MiFIR and SFTR reporting obligations?

The core trade/transaction reporting obligations under EMIR/MiFIR/SFTR and UK EMIR/MiFIR/SFTR are fundamentally the same. Essentially, it is similar to a no-deal Brexit with regard to the regulatory reporting requirements.

However, there are some changes in the scope of reporting after Brexit depending on the locations of investment firms, nationality of clients, and jurisdictions of Trade Repositories (TRs) or Approved Reporting Mechanism (ARMs).

What are the potential changes in the future?

A Memorandum of Understanding (MoU) between the UK Financial Conduct Authority (FCA) and European Securities Markets Authority (ESMA) was published on 4 January 2021. The MoU covered data sharing and supervision of trade repositories.

1. Mutual Recognition Arrangement regarding TRs and ARMs

Due to there being no deal made in respect of TRs and ARMs upon Brexit, UK TRs and EU TRs are separate. Firms such as DTCC and UnaVista have set up separate UK-based and EU-based ARMs and TRs to continue serving the market post-Brexit.

The MoU provides a plan for a Cross-Border TR which will allow for equivalence of trade repositories between the FCA and ESMA through registration or recognition.

In the near future, we can expect a mutual recognition of TRs between the FCA and ESMA if they deem these TRs are of sufficient equivalence in terms of governance and operations upon full assessment.

2. Data Sharing

Both the UK FCA and ESMA acknowledge that the transfer of personal data will take place in accordance with the conditions laid down in the relevant data protection legislation applicable to the FCA and to ESMA. The MoU provides parameters on how and when the data can be shared.

TRAction will keep you updated. If you have any questions, please contact us.

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