July 22, 2019

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European Commission Adopts Fifth Communication Regarding Preparations for a No-Deal Brexit

On June 12, and ahead of the European Council meeting on June 20 and 21, the European Commission (EC) adopted a fifth Brexit Preparedness Communication, taking stock of the European Union’s preparations and contingency measures if the United Kingdom exits the European Union without a deal or an implementation period (No-Deal Brexit).

In its Fifth Communication the EC reiterates that, in the event of a No-Deal Brexit, the European Union would not consider discussing a future relationship with the United Kingdom unless the United Kingdom addressed three main separation issues: citizens’ rights, the United Kingdom’s financial commitments made as a member state, preserving the Good Friday Agreement and peace on the island of Ireland, and preserving the integrity of the single market.

The Fifth Communication also summarizes the No-Deal Brexit preparedness measures taken by the EC since it started planning for such a scenario in December 2017.   These include tabling 19 legislative proposals, adopting 63 non-legislative acts and publishing 93 preparedness notices. The EC concludes that these remain fit for purpose and that the remaining EU member states (EU27) are well prepared. The EC does not plan any new measures ahead of the United Kingdom’s new date of withdrawal from the EU (Brexit).

However, the EC’s Fifth Communication focuses on areas in which continued and particular vigilance is needed over the next few months, i.e., citizens’ residence and social security entitlements; medicinal products, medical devices and chemical substances; customs, indirect taxation and border posts; transport; fishing and financial services. Of particular concern is the preparedness of some financial services companies.

The EC believes that the scenario of a No-Deal Brexit remains a possible, but undesirable, outcome, as it could cause significant disruption for EU citizens and businesses, and would have a significantly greater negative economic impact on the United Kingdom than on the EU27. Therefore, it urges all stakeholders to take advantage of the extra time provided by extending Brexit to October 31 to ensure that they have taken all necessary measures to prepare for Brexit.

The EC’s press release is available here.

The EC’s Fifth Communication 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
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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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