On 13 May 2021, there was published on legislation.gov.uk a draft of The Financial Markets and Insolvency (Transitional Provision) (EU Exit) (Amendment) Regulations 2021.
The purpose of the draft statutory instrument is to ensure that there is continuity for UK firms and their customers who rely on EEA systems retaining settlement finality protection as a requirement for continued membership to those systems. UK firms could need up to two years to find alternative service providers if membership to any of these EEA systems was denied as a result of the EEA systems failure to apply for designation under the UK Settlement Finality Regulations by 30 June 2021 as stipulated in the UK temporary designation regime (TDR) created by The Financial Markets and Insolvency (Amendment and Transitional Provision) (EU Exit) Regulations 2019.
To ensure that UK firms are given sufficient notice that EU systems will be losing settlement finality protection under the TDR, the draft statutory instrument creates a run-off regime whereby EEA systems that fail to apply for UK SFR designation by the deadline will retain their protections under the TDR until 30 June 2023. This allows UK firms to put proper contingency plans in place if this impacts the access requirements to the EEA systems.