Out-Law News 1 min. read
11 Sep 2019, 10:04 am
The European Commission has called on financial services firms to finalise their preparations for Brexit before the current date for the UK’s withdrawal from the EU of 31 October 2019.
In a communication to other European bodies, including the European Parliament and European Council, the Commission said that while most financial services firms “have largely prepared for a withdrawal without an agreement”, those which had not should make sure they were ready for a no-deal Brexit.
The Commission said in its communication (13 page / 476KB PDF) that contingency measures if adopted in December 2018 were sufficient to allow financial services firms to continue operating in the wake of a no-deal Brexit materialising at the end of October.
The two main contingency measures included allowing the European Securities and Markets Authority (ESMA) to temporarily recognise central counterparties established in the UK until 30 March 2020. The second contingency measure enables UK central securities depositaries to continue providing notary and maintenance services to EU operators until 30 March 2021.
It said that because financial services firms were generally prepared for Brexit, it was not necessary to adopt further contingency measures – although the Commission would continue to monitor the markets after the withdrawal date and take appropriate action if necessary.
Financial services expert Tobin Ashby of Pinsent Masons, the law firm behind Out-Law, said: "The measures referred to by the EU Commission are not focused on helping financial services firms honour individual contracts with their customers. Financial services firms will probably have already considered what is needed from the Brexit perspective for any cross-border business the last time a hard Brexit appeared imminent."
“However, given the time elapsed since April, we would expect local regulators to have a clearer view by now on how they are likely to treat existing cross-border contracts emanating from the UK and firms should take the opportunity to reconsider their approach to existing business against regulatory guidance and any changes to relevant books of business since then,” Ashby said.