December 18, 2018

December 18, 2018

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December 17, 2018

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Chief Brexit Negotiators Discuss Post-Brexit Treatment of UK Financial Regulations

On January 9, Michel Barnier, the European Union’s (EU’s) chief Brexit negotiator, delivered a speech at the “Trends Manager of the Year 2017” event in Brussels, and on January 10, the UK’s Chancellor of the Exchequer, Philip Hammond, and the UK’s Secretary of State for Exiting the EU, David Davis, published a joint article that originally appeared in Frankfurter Allgemeine Zeitung, a German newspaper. Both the speech and the article commented on future economic ties between the EU and the UK, covering a broad range of services industries, focusing in particular on financial services.

Mr. Hammond and Mr. Davis wrote that the UK will be seeking to “ensure that financial authorities across the world can cooperate in rule-setting and supervising systemically important global firms.” Therefore they will be re-doubling their efforts to get “a deal that supports collaboration within the European banking sector, rather than forcing it to fragment.” They have proposed a time-limited implementation period after the UK leaves the EU so that access to the EU from the UK and vice versa can continue in its current form, using the EU’s existing regulations and agencies. The European Commission has proposed that the implementation period last for 21 months, from the date of the UK’s withdrawal on March 29, 2019 to December 31, 2020, to allow businesses and public administrations the time to prepare themselves for the finalized withdrawal agreement.

In his speech, M. Barnier said that by using “a proportionate and risk-based approach.” the EU would be able to consider some of the UK’s financial rules as equivalent to those of the EU. But he also reiterated that once the UK exited the EU on March 29, 2019, the EU would not give UK financial firms a general “passport” to do business in the single market. Therefore, a system of generalized equivalence of standards would not be enjoyed by the UK’s financial service providers. Mr. Barnier also warned that a “trading relationship with a country that does not belong to the European Union will never be frictionless.”

Mr. Barnier concluded that the EU27 will need to continue to work together in a united way to reform Europe and to overcome challenges, including building a real Capital Markets Union and a “global Europe” prepared to offer its businesses new opportunities to export to Australia and New Zealand.

A copy of Mr. Barnier’s speech is available here.

A copy of the article by Mr. Hammond and Mr. Davis is available here.


©2018 Katten Muchin Rosenman LLP


About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm

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...

+44 0 20 7776 7625
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 and documentation relating to OTC derivatives and structured products.

Prior to joining Katten, Nathaniel was a member of the US Regulatory and the Derivatives and Structured Finance practices at Allen & Overy LLP.

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

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...