On 29 January 2019, there was published on legislation.gov.uk a draft of The Transparency of Securities Financing Transactions and of Reuse (Amendment) (EU Exit) Regulations 2019, together with an explanatory memorandum. The draft statutory instrument has been laid before Parliament and was first published on 19 December 2018 (our blog is here).

The draft statutory instrument is being made to address deficiencies in retained EU law in relation to the EU Securities Financing Transactions Regulation (SFTR), and the UK Financial Services and Markets Act 2000 (Transparency of Securities Financing Transactions and of Reuse) Regulations 2016. The SFTR is the EU’s response to the recommendations made by the Financial Stability Board. The SFTR aims to manage risks posed by SFTs by creating a framework under which details of transactions must be reported to trade repositories. This information must then be disclosed to investors, and national regulators are required to act in cases where firms are deemed to be engaging in risky practice.

The draft statutory instrument makes amendments to ensure that the regulation of securities financing transactions (SFTs) operate effectively at the point at which the UK leaves the EU. Key changes include:

  • changing the treatment of EEA branches of financial services firms in the UK, so that after exit, EEA branches operating in the UK must report their transactions to a UK trade repository. This will bring treatment of EEA branches into line with the current treatment of other third country branches in the UK;
  • amending the list of entities that have the right to access SFT data reported to trade repositories. EU bodies are removed, and the list is made UK-specific to reflect the UK’s position outside the EU; and
  • transferring responsibilities under SFTR that currently sit with EU institutions to the appropriate UK equivalent.

You can track the financial services Brexit EU Exit statutory instruments (as well as gain access to our Brexit resources) on our Brexit Pathfinder hub. Registration is free via the NRF Institute portal. Conformed copies of the EU Exit statutory instruments are available exclusively through our PathfinderPLUS service. To gain access to PathfinderPLUS, please contact Jochen Vester or Simon Lovegrove.