BoE

UK and US Authorities Release Statement on Post-Brexit Continuity of Derivatives Trading and Clearing

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On February 25, the Bank of England (BoE), the Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) published a joint statement detailing the measures that will be taken to ensure the continuity of UK-US derivatives trading and clearing activities after Brexit.

The measures address:

UK equivalence for the US: UK authorities have confirmed that US trading venues, firms and central counterparties (CCPs) will be able to continue providing services in the UK. The basis on which these trading venues, firms and CCPs currently provide services in the EU and to EU firms is as a result of various decisions taken by the European Commission in declaring the CFTC regulatory framework equivalent.

Continued supervisory co-operation: The FCA and CFTC will update their memorandums of understanding (MoUs) covering certain firms in the derivatives and the alternative investment fund industry. The BoE and CFTC will update their MoU covering clearing activity, in connection with the UK’s forthcoming recognition of CFTC-registered CCPs.

Extension of existing CFTC relief and comparability for the UK: The CFTC intends that existing regulatory relief granted by the CFTC to EU firms, including UK firms, will be extended to UK firms when the UK leaves the EU.

UK Withdrawl from the EU: Changes to PRA Rulebook and Onshored Binding Technical Standards

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On October 25, the Bank of England (“BOE“) and the PRA published a package of consultation papers that propose changes to the relevant onshored binding technical standards (“BTS“), the rules for financial market infrastructure providers and the PRA Rulebook arising from the UK’s withdrawal from the EU. They do not reflect any other policy changes other that those related to EU withdrawal.

The deadline for comments on all four consultation papers in January 2, 2019.

The papers are relevant to:

  • All firms authorized and regulated by the PRA.
  • EEA firms undertaking cross-border activities into the UK from the rest of the EU.
  • UK financial market infrastructures (“FMIs“) regulated by the BOE.
  • Non-UK central counterparties (“CCPs“) and central securities depositories (“CSDs“) providing cross-border services into the UK.

PRA Publishes Speech on Solvency II Models, Bonus Caps and Governance

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On October 16, the Bank of England (BoE) published a speech given by Andrew Bailey, BoE Deputy Governor, Prudential Regulation and Chief Executive Officer, Prudential Regulation Authority, that considered, among other things, the use of models under the Solvency II Directive, the merits of the CRD IV Directive bonus caps for bankers and reforms to the governance of banks and insurers.  Speech.