ESMA Publishes Statement on No-Deal Brexit Contingency Plans of CRAs and Trade Repositories


ESMA published a statement on the contingency plans of credit rating agencies (“CRAs“) and trade repositories (“TRs“) in the context of Brexit (ESMA80-187-149) on November 9.

ESMA has published the statement to raise market participants’ awareness of the readiness of CRAs and TRs for the possibility of there being a no-deal Brexit. ESMA states that entities using services provided by CRAs and TRs need to consider the scenario of a no-deal Brexit and the consequences of TRs and CRAs established in the UK losing their EU registration when the UK leaves the EU.

In the statement, ESMA states that:

  • It is engaging on a continuous basis with the relevant supervised entities to ensure that agreed Brexit contingency plans are fully executed by March 2019, including the finalization of pending applications for registration. ESMA is currently assessing a number of registration applications from CRAs and TRs, submitted as part of their Brexit contingency plans.
  • It intends to put in place memorandums of understanding (“MoUs“) with the FCA to allow information exchange for effective supervision and enforcement. It plans to start negotiations with the FCA to ensure that the MoUs are in place sufficiently in time before the end of March 2019.
  • All EU counterparties and central counterparties (“CCPs“) must ensure that they continue to fulfill the requirement that details of derivatives contracts are reported to a registered EU-established TR or a recognised third-country TR. ESMA invites market participants to contact their TR to check whether continuity of service will be ensured after Brexit.
  • Counterparties should ensure that they and their reporting entities fully adhere to the most recent reporting requirements to better enable any potential transfer of data due to the UK’s withdrawal and to ensure their continuous compliance with the reporting obligation set out in EMIR (the Regulation on OTC derivatives, central counterparties and trade repositories) (Regulation 648/2012). ESMA has raised this issue as it anticipates that some counterparties may need to request their existing UK TR to port their data to an EU TR.
  • Market participants must closely monitor public disclosures made by CRAs and TRs in the context of Brexit.