On 9 November 2018, the European Securities and Markets Authority (ESMA) issued a public statement in order to raise market participants’ awareness on the readiness of credit rating agencies (CRAs) and trade repositories (TRs) for the possibility of no agreement being reached in the context of the UK withdrawing from the EU.

Points in the public statement include:

  • derivatives subject to the reporting obligation under EMIR must be reported to a registered EU-established TR or a recognised third-country TR. CRAs need to have a legal entity registered in the EU and supervised by ESMA, in order for their ratings to be used for regulatory purposes in the EU. In a no-deal Brexit scenario, TRs and CRAs established in the UK will lose their EU registration as of the UK’s withdrawal date;
  • UK-based CRAs and TRs currently registered with ESMA have implemented contingency plans in preparation of a no-deal Brexit scenario. Significant steps have been taken but some actions still need to be completed;
  • EU counterparties and central counterparties must report details of derivative contracts to a registered EU-established TR or recognised third country TR. All counterparties must ensure that this requirement continues to be fulfilled. ESMA invites market participants to contact their TR to verify whether continuity of service will be ensured after Brexit; and
  • ESMA is preparing for the eventuality that some counterparties may need to request their existing UK TR to port their data to a EU27 TR. Ensuring data quality in the transfer of EMIR data from one TR to another is key.