UK: The Financial Markets and Insolvency (Amendment and Transitional Provision) (EU Exit) Regulations 2019

The Financial Markets and Insolvency (Amendment and Transitional Provision) (EU Exit) Regulations 2019 were made yesterday (the 21st): see here or here (pdf). They are accompanied by an explanatory memorandum and impact assessment: see, respectively, here (pdf) and here (pdf). A short explanatory note is available here. Regulation 1 and those within Part 4 ("Temporary designation regime") came into force today; the remaining Regulations come into force on exit day. The explanatory memorandum states (paras. 2.6 and 2.7):

To ensure the legal framework for settlement finality protections continues to operate effectively after the UK withdraws from the EU, deficiencies in the existing legislation, including the scope of the legislation and references to EU bodies, need to be addressed. Currently, the UK automatically recognises SFD [Settlement Finality Directive (98/26/EC)] designations made by other EU Member States and extends UK SFR protections [see The Financial Markets and Insolvency (Settlement Finality) Regulations 1999] to central banks in these Member States. When the UK leaves the EU, it will no longer automatically recognise SFD designations made by other EU Member States of their domestic systems or extend UK SFR protection to EU central banks.

The instrument gives the Bank of England powers to designate systems not governed by UK law (‘non-UK systems’) under the [The Financial Markets and Insolvency (Settlement Finality) Regulations 1999] and to extend UK SFR protection to non-UK central banks. The instrument also introduces a temporary regime ... that will enable the current treatment of EU systems and central banks to be maintained, provided that the relevant conditions are met. It will also enable this protection to be extended to non-EEA countries".

Note - last month the Bank of England published an interim list of the operators of EEA systems indicating their intention to join the temporary designation regime: see here (pdf). At this time (and before the above Regulations became law), the Bank said that it would treat such indications as the required notification and confirmed that the EEA systems would enter the temporary designation regime on exit day if the UK left the EU with no implementation period.

UK: Bank of England annual report on the supervision of financial market infrastructures

The UK's central bank - the Bank of England - has published a report in respect of its supervision of financial market infrastructures (e.g., central counterparties, securities settlement system, and payment systems). The report explains how the bank exercised its responsibilities over the past year and also identifies the principal priorities for 2016/17. A copy of the report is available here (pdf).

The report contains the following diagram that illustrates well the relationships and linkages between central counterparties and banks:

UK: the supervision of financial market infrastructure

The Bank of England has published a document in which it sets out its approach to the supervision of financial market infrastructure (e.g., securities settlement systems and central counterparties) under the new regulatory framework being introduced next spring: see here (pdf). In addition, a draft memorandum of understanding has been published which sets out the framework the Bank, the Financial Conduct Authority and the Prudential Regulation Authority will follow in their cooperation over markets and market infrastructure: see here (pdf).

Europe: Commission publishes securities settlement proposals

The European Commission has published legislative proposals for the reform of the securities settlement process. The harmonisation of the timing and conduct of securities settlement in Europe is proposed, including a maximum settlement period of two days after the trading day. The dematerialisation of most securities by 1 January 2010 is also proposed. For further information see: Commission press release | FAQs | Proposed Regulation (pdf) | Impact assessment: summary (pdf) and full text (pdf) |