On 24 July 2018, HM Treasury outlined its plans to propose secondary legislation on the continuation of settlement finality protections (relating to the Settlement Finality Directive (98/26/EC) (SFD)) after Brexit.
HM Treasury envisages the legislation will:
- Allow designations of non-UK financial market infrastructure (FMIs) under the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 and give the Bank of England functions and powers to designate these FMIs; and
- Establish a temporary designation regime to enable non-UK FMIs to continue benefitting from UK protections provided in the SFD. This regime will be open to EU systems currently designated under the SFD before permanent designation is granted.
The BoE has also published a letter sent to CEOs of operators of systems currently designated under the SFD in relation to the proposed temporary designation regime. The letter considers which systems will need UK SFD designation after Brexit and the process that systems should follow to enter into the temporary designation regime.