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BoE and ESMA Agree No-Deal MoUs on Recognition of UK CCPs and CSDs

On February 4, the European Securities and Markets Authority (ESMA) and the Bank of England announced that they have agreed on Memorandums of Understanding (MoUs) surrounding the cooperation and information-sharing arrangements with respect to UK-based central counterparties (CCPs) and central securities depositories (CSDs) in the event of the United Kingdom’s exit from the European Union on March 29 (Exit Day) without an agreement on transitional arrangements being in place with the EU (no-deal Brexit).

The MoUs follow the adoption by the European Commission in December 2018 of temporary equivalence decisions on the future UK legal and supervisory framework for UK CCPs and CSDs (for further information see the December 14, 2018 edition of Corporate & Financial Weekly Digest). Although the texts of the MoUs have not been published, ESMA has described the MoUs as statements of intent to consult, cooperate and exchange information regarding UK CCPs and CSDs.

ESMA has previously made public statements of support for continued access to UK CCPs and CSDs, in order to limit the risk of disruption in central clearing and to avoid any negative impact on the financial stability of the European Union.

While the MoUs satisfy only one of four requirements for the recognition of UK CCPs and CSDs under the European Market Infrastructure Regulation and Central Security Depositories Regulation, respectively, ESMA aims to complete the remaining necessary steps and adopt recognition decisions “well ahead” of Brexit. In the event of a no-deal Brexit, the recognition decisions will take effect the day after Exit Day.

ESMA’s press release is available here.

The Bank of England’s statement is available here.

©2019 Katten Muchin Rosenman LLP

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John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
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Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
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Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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