UK Chancellor announcement on the future of the UK outside of the EU

On 24 June, the UK Chancellor stated that the government continues to believe that equivalence between the UK and the EU are in the best interests of both parties. However, there will be some divergence where the UK government deems this to be appropriate.

Key takeaways:

• There will be a new Investment Firms Prudential Regime (IFPR) and updated rules for credit institutions.
• The government will implement the Fifth Capital Requirements Directive (CRDV), and the Bank Recovery and Resolution Directive II (BRRDII) by 28 December 2020.
• In the transposition of BRRDII, the UK are not intending to transpose the requirements in the Directive that do not need to be complied with by firms until after the end of the EU Exit Transition Period, in particular Article 1(17) which revises the framework for MREL requirements across the EU.
• The government also plans to bring forward a review of certain features of Solvency II, such as the risk margin, the matching adjustment, the operation of internal models and reporting requirements for insurers.
• The UK will not be implementing the EU’s new settlement discipline regime, set out in the Central Securities Depositories Regulation.
• The UK will not be incorporating the reporting obligation of the EU’s Securities Financing Transactions Regulation for non-financial counterparties (NFCs) into UK law.

HM Treasury plans to set out further detail on upcoming legislation which will include:

• amendments to the Benchmarks Regulation;
• amendments to the Market Abuse Regulation;
• legislation to improve the functioning of the PRIIPs regime; and
• legislation to complete the implementation of the European Market Infrastructure Regulation (REFIT).

HM Treasury has also published a written ministerial statement in relation to ‘tough legacy’ contracts that cannot transition from LIBOR before the end of 2021.