ESMA will review new UK financial market rules on governance and reporting obligations following the UK’s withdrawal from the European Union. The UK FCA will no longer be a member of ESMA’s Board of Supervisors or other ESMA governance body, from 1 February. During the transition period, the rights and obligations for UK entities under EU law will continue to apply.
31 January, 2020 | AtoZ Markets – The ESMA (European Securities and Markets Authority) announced a statement that clarifies issues related to reporting obligations for UK entities following Brexit. ESMA has stated that it will verify how Britain will apply the EU’s financial rules during the transition period. The transition period is from 1 February 2020 to 31 December 2020. Britain leaves the EU at 23:00 GMT, with a business-as-usual transition period until the end of December.
ESMA: UK Financial Markets Rules During the Transition Period
During the transition period, UK representatives will no longer be able to participate in EU institutions or other bodies. The UK FCA will no longer be a member of the board of ESMA supervisors or other ESMA governance body from 1 February.
EU law will continue to apply to the UK, as if it were a Member State, during the Brexit transition period. The rights and obligations for UK entities under EU law will continue to apply. The reporting and reporting obligations are such as under MiFIDII / MiFIR, EMIR, CSDR, AIFMD, MMFR.
ESMA will continue to supervise the registered credit rating agencies, trade repositories and securitization repositories in the UK directly during the transition period. The UK FCA noted that businesses and funds would continue to benefit from the passport between the UK and the EEA. Consumer rights and the protections deriving from Community law will also remain in force.
ESMA Will Engage with the European Commission
ESMA will advise the European Commission to give investment firms and trading platforms in London direct access to EU investors. Brussels would have to consider that UK market rules are sufficiently aligned with EU regulation to grant access. ESMA will check for any signs of divergence in the rules.
British Prime Minister Boris Johnson said that UK would not be a “rule-taker” after Brexit. It will not continue to copy EU rules but will write its own.
ESMA said that after Friday, Britain would no longer take part in politics or decisions making with ESMA. The EU has yet to finalize new rules. The rules will affect the main foreign derivatives clearinghouses (such as the London Stock Exchange’s LCH unit) serving EU investors. ESMA said:
Over the next eleven months, ESMA will continue to monitor the application of Community law in the UK. ESMA will closely monitor developments in preparation for the end of the transition period.
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