On February 8, the European Commission’s Directorate General for Financial Stability, Financial Services and Capital Markets (DG FISMA) published a webpage containing a number of notices to financial services stakeholders highlighting the consequences of Brexit on:

  • markets in financial instruments;
  • banking and payment services;
  • post-trade financial services;
  • asset management;
  • credit rating agencies;
  • insurance/reinsurance; and
  • statutory audit.

The notices, which various EC Directorates General are publishing in relation to different sectors, aim to set out the consequences of the United Kingdom withdrawing from the European Union and becoming a third- country, and UK-based firms losing their EU authorization under financial services legislation, as well as outlining the necessary preparations that stakeholders should make.

Key points under the notices include the following with respect to:

  • Markets in financial instruments: UK-based central counterparties (CCPs) will no longer benefit from the open and non-discriminatory access to EU trading venues and to EU benchmarks;
  • Asset management: Branches of UK managers in the European Union will be treated as branches of a non-EU alternative investment fund manager as of the date of the United Kingdom’s withdrawal from the European Union, and such branches will be subject to the requirements of national private placement regimes, where available;
  • Post-trade financial services: Derivatives traded on a UK-regulated market will no longer fulfill the definition of exchange-traded derivatives under EU law, therefore they will be subject to the European Market Infrastructure Regulation requirements for OTC transactions;
  • Banking and payment services: The prudential treatment of exposures to third parties established in the United Kingdom will be affected; for example, the assessment of the eligibility of liabilities for the minimum requirement for own funds and eligible liabilities may be affected for those liabilities issued under UK law.

More generally, the European Commission explains in each notice that, unless a ratified withdrawal agreement establishes another date, all primary and secondary EU law will cease to apply to the United Kingdom beginning March 30, 2019.

The EC’s webpage with the notices is available here.