The time is finally here – the United Kingdom has officially left the European Union. Investment firms and brokerages have been waiting in anticipation for there to be some clarity , so now the time has come, what does this mean for firms operating in either of these regions in terms of regulation?
Following the UK’s withdrawal from the bloc on the 31st of January 2020, the region is now in an 11-month transition period, beginning on the 1st of February and ending at the end of this year on the 31st of December. This means that unfortunately, firms are going to have to wait almost another year until they get an answer.
Do brokers need to change their EMIR and MiFIR reporting?
So do brokers need to make any changes to their current (EMIR) and (MiFIR) reporting? The short answer is not yet.
What happens if a no-deal Brexit occurs?
Although a transition period has been put in place, there is still a risk that the UK might not reach an agreement with the EU by the 1st of January, 2021, which is referred to as a hard Brexit.
However, regardless of whether a deal is struck, Perrott highlighted that Britain will leave all the institutions and structures of the EU, such as EU judicial structures including the European court of justice, EU security and defence arrangements and agreements such as data sharing.
The transition period allows the UK to further negotiate with the EU to secure a deal, nonetheless, at this point, it remains unclear if a deal will be reached and what it might look like.
Therefore, when it comes to the question – what will be the impact on EMIR and MiFIR Reporting – at this stage, no one knows, and financial firms must yet again take a wait-and-see approach.
“In either case, we anticipate that clients domiciled in the EU will need to report to EU-based (as it will then be constituted) TRs and ARMs. Investment Managers and firms in the UK will need to continue to submit reports in the current format, but likely to UK-based TRs and ARMs, until such a time any changes are made by the FCA to EMIR and MiFIR to create a divergence from the current EU directives and regulations,” added Perrott.
Although the UK has officially left the bloc after more than three years since the vote took place on the 23rd of June, 2016, .