Statements from EU member states as well as the UK's financial regulators show they are preparing for the prospect of Britain leaving the EU on 29 March next year – in just 149 days – without an agreement and therefore without a transition period, as a very real possibility.
Yesterday EU diplomats agreed to hold a series of no-deal planning seminars in November, covering citizens’ rights, aviation, ground transport, customs, border controls and financial services.
Last week the Bank of England set out its approach to financial services legislation under the European Union (Withdrawal) Act, in a range of communications that include several consultation papers issued jointly with the Prudential Regulation Authority (PRA) on technical standards affecting financial market infrastructures (FMIs). The BofE stated that “This acts as a contingency for a scenario in which the implementation period, which has been agreed in principle as part of the UK’s Withdrawal Agreement with the EU, does not take effect on 29 March 2019.”
And in a speech by the Financial Conduct Authority (FCA) chief executive, Andrew Bailey, it was also spelled out that “the FCA is on course to be ready for a hard exit from the EU and has the resources to handle it”. He emphasised that the authority is preparing for both the possibility of an implementation period and a 'hard' and sudden exit. He also noted that one of the most important tasks facing the UK regulators and their EU counterparts is to put in place memorandums of understanding (MoUs), so that cross-border supervision of firms and data sharing are supported after 29 March. He said: “This technical, regulator-to-regulator coordination is essential to minimise disruption in a no-deal situation.” And he went on to add that Steven Maijoor, the Chairman of the European Securities Markets Authorities (ESMA), has committed to start work on MoUs to avoid disruption to clearing.
CTMfile take: It seems that a hard Brexit is now a very real prospect. Companies should also be putting in place contingency plans for ensuring as little disruption as possible to their supply chains, payments and banking infrastructure.
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