On 8 October 2018, HM Treasury published a draft of the Trade Repositories (Amendment and Transition Provision) (EU exit) Regulations 2018 together with a draft explanatory memorandum.

The draft Regulations form part of a series of draft statutory instruments that HM Treasury is publishing as part of its contingency planning for a no-deal Brexit. The statutory instruments are made by HM Treasury in exercise of its powers conferred by the European Union (Withdrawal) Act 2018. Other draft statutory instruments made by HM Treasury can be found here.

The purpose of the draft Regulations is to ensure that the UK’s legal framework for reporting of derivatives trades to trade repositories (TRs) will continue to operate effectively after the UK has left the EU.

In particular the draft Regulations:

  • transfer the European Securities and Markets Authority’s (ESMA) functions relating to the requirements for the registration of TRs. It amends, and transfers registration functions carried out by ESMA to the FCA. It also sets out data sharing requirements for TRs;
  • allows TRs to submit applications for registration by the FCA in advance of Brexit day. This includes pre-exit powers for the FCA to accept and assess an application. An application must be submitted to the FCA before Brexit day and should demonstrate that the TR meets the Title VII requirements in European Markets Infrastructure Regulation. The FCA will have 20 working days to assess the application and deem it complete or incomplete. If the application is incomplete the FCA will request further information from the applicant. Once a TR’s application is deemed complete, the FCA has 40 working days to assess it and make a registration decision;
  • sets out a temporary registration regime allowing existing UK and EU TRs who wish to establish a new UK legal entity to benefit from temporary registration whilst their application is being considered by the FCA. It will last for three years from Brexit day. Eligible TRs will be required to submit an advance application to the FCA and meet the requirement that they are an entity which forms part of a group which includes an ESMA-registered TR. The FCA is given power to withdraw an entity from the temporary regime if the TR does not achieve full compliance with the requirements; and
  • creates a conversion regime whereby UK TRs who are currently registered by ESMA are registered as authorised UK TRs by the FCA from Brexit day.