Last week the European Securities and Markets Authority issued a statement on its approach to the application of some key MiFID II / MiFIR and EU Benchmark Regulation (BMR) provisions should the UK leave the EU without a deal.
On 13 March 2019, the FCA issued a statement setting out its own views on the issues.
The FCA statement makes the following points:
- on day 1 after the UK leaves the EU, UK and EU trading venues will operate to the same set of standards. If the UK leaves the EU without a deal the FCA will not require UK investment firms to make public, through a UK Approved Publication Arrangement (APA), transactions conducted on EU trading venues in instruments which are also traded on a trading venue in the UK. In addition, commodity derivative contracts traded on EU trading venues should not be considered as economically equivalent over-the-counter contracts and will not count towards the UK position limit regime;
- under the temporary transitional power, UK investment firms that did not have a reporting obligation for a transaction conducted with an EU27 investment firm before Brexit will not be required to report these transactions to a UK APA for a period of 15 months after Brexit. EU27 investment firms with a branch in the UK that has entered the UK temporary permissions regime may fulfil their UK trade reporting obligations by continuing to make transactions public through an EU APA, where they are obliged to do so;
- the FCA’s approach to the trading obligation for derivatives is set out in the onshored MiFID II / MiFIR and the associated binding technical standards; and
- the UK’s approach to bringing the BMR into UK law, including the transitional period and the register of administrators and benchmarks, is set out in the relevant onshoring Exit instrument and is summarised in an explanatory policy note. The FCA will provide further information shortly on the operation of the UK benchmarks register.