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Oxford Law Citator
Contents
Expand All
Collapse All
Preliminary Material
Contents
Detailed Contents
Table of Cases
Table of European Legislation
Primary Legislation
Secondary Legislation
Decision
Directives
European Economic Area
Regulation
UK Legislation
Statutes
Statutory Instruments
Bill
Technical Standards
Other National Legislation
France Legislation
German Legislation
Ireland Legislation
Netherlands Legislation
US Legislation
List of Abbreviations
List of Contributors
Main Text
1 Introduction
1.1 The Referendum
1.01
1.02
1.03
1.04
1.05
1.06
1.07
1.08
1.2 Article 50 Notification
1.09
1.10
1.11
1.12
1.3 The Negotiations
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.4 Chequers Plan
1.20
1.21
1.5 Withdrawal Agreement and Political Declaration on the Future EU–UK Relationship
1.22
1.23
1.24
1.25
1.6 Ratification of the Withdrawal Agreement
1.26
1.27
1.28
1.29
1.30
1.31
1.32
1.33
1.34
1.35
1.36
1.37
1.38
1.7 Preparations for the No-Deal Scenario
1.39
1.40
1.41
1.42
1.43
1.44
1.45
1.46
1.47
1.48
1.49
1.50
1.51
1.52
1.53
1.54
1.55
1.56
1.57
1.58
1.59
1.60
1.61
1.62
1.63
1.64
1.65
1.66
1.67
1.68
1.69
1.70
1.71
1.72
1.73
1.74
1.75
1.76
1.77
1.78
1.8 Brexit and Financial Regulation: an Overview
1.79
1.80
1.8.1 Part I
1.81
1.82
1.83
1.8.2 Part II
1.84
1.85
1.86
1.87
1.88
1.8.3 Part III
1.89
2 Withdrawal Agreement and Political Declaration on the Future EU–UK Relationship
2.1 Introduction
2.01
2.2 Ratification
2.02
2.03
2.04
2.05
2.06
2.3 Renegotiation
2.07
2.08
2.4 Structure
2.09
2.5 Protocols
2.10
2.11
2.6 Implications for Financial Services
2.12
2.7 Dispute Resolution
2.13
2.14
2.15
2.16
2.17
2.18
2.19
2.8 The Political Declaration on the Future EU–UK relationship
2.20
2.21
2.22
2.9 Five Parts
2.23
2.10 Implications for Financial Services
2.24
2.25
2.26
2.27
2.28
2.11 Going Forward
2.29
2.30
2.31
2.32
2.33
2.12 FCA EU Withdrawal Impact Assessment
2.34
2.35
2.36
2.37
2.38
3 International Standards
3.1 Introduction
3.01
3.2 Governments, Central Banks, and Regulators Participating as Members of International Bodies
3.02
3.2.1 Organisation for Economic Co-operation and Development (OECD)
3.03
3.2.1.1 History
3.04
3.05
3.2.1.2 Structure
3.06
3.2.1.3 Membership
3.07
3.08
3.2.1.4 Activities
3.09
3.10
3.11
(a) Principles of Corporate Governance
3.12
3.13
3.14
3.2.2 IMF
3.15
3.2.2.1 History
3.16
3.17
3.2.2.2 Structure
3.18
3.2.2.3 Membership
3.19
3.20
3.2.2.4 Activities
3.21
3.22
(a) Fiscal Transparency Code
3.23
3.24
3.25
(b) Code of Good Practices on Transparency in Monetary and Financial Policies
3.26
3.27
3.28
3.29
3.2.3 Bank for International Settlements (BIS)
3.30
3.2.3.1 History
3.31
3.32
3.2.3.2 Structure
3.33
3.34
3.2.3.3 Membership
3.35
3.36
3.2.3.4 Activities
3.37
3.2.4 FSB
3.38
3.2.4.1 History
3.39
3.40
3.2.4.2 Structure
3.41
3.2.4.3 Membership
3.42
3.43
3.2.4.4 Activities
3.44
3.45
3.46
(a) Compendium of Standards
3.47
3.48
3.49
(i) Key Attributes
3.50
3.51
3.52
3.2.5 FATF
3.53
3.2.5.1 History
3.54
3.55
3.2.5.2 Structure
3.56
3.2.5.3 Membership
3.57
3.58
3.2.5.4 Activities
3.59
3.60
3.61
3.62
3.2.6 CPMI
3.63
3.2.6.1 History
3.64
3.65
3.2.6.2 Structure
3.66
3.67
3.2.6.3 Membership
3.68
3.69
3.2.6.4 Activities
3.70
3.71
3.72
3.73
(a) Principles for Financial Markets Infrastructures (PFMI)
3.74
3.75
3.76
3.77
3.78
3.79
3.2.7 Basel Committee on Banking Supervision (BCBS)
3.80
3.2.7.1 History
3.81
3.82
3.2.7.2 Structure
3.83
3.2.7.3 Membership
3.84
3.85
3.86
3.2.7.4 Activities
3.87
3.88
(a) Core Principles for Effective Banking Supervision (Core Principles)
3.89
3.90
3.91
3.92
3.93
(b) International convergence of capital measurement and capital standards
3.94
3.95
3.96
3.97
3.98
3.99
3.2.8 IOSCO
3.100
3.2.8.1 History
3.101
3.102
3.2.8.2 Structure
3.103
3.104
3.105
3.2.8.3 Membership
3.106
3.107
3.108
3.109
3.2.8.4 Activities
3.110
3.111
3.112
(a) Objectives and Principles
3.113
3.114
3.115
3.116
3.117
3.118
3.119
3.2.9 Global Foreign Exchange Committee (GFXC)
3.120
3.2.9.1 History
3.121
3.2.9.2 Structure and membership
3.122
3.123
3.2.9.3 Activities
3.124
(a) FX Global Code
3.125
3.126
3.127
3.128
3.129
(b) Competition/Antitrust Law Guidelines for Members of the GFXC (Competition Guidelines)
3.130
3.2.10 International Association of Insurance Supervisors (IAIS)
3.131
3.2.10.1 History
3.132
3.133
3.2.10.2 Structure
3.134
3.135
3.2.10.3 Membership
3.136
3.137
3.2.10.4 Activities
3.138
3.139
(a) ICPs
3.140
3.141
3.142
3.143
3.2.11 International Organisation of Pension Supervisors (IOPS)
3.144
3.2.11.1 History
3.145
3.146
3.2.11.2 Structure
3.147
3.148
3.2.11.3 Membership
3.149
3.150
3.2.11.4 Activities
3.151
(a) Principles of Private Pension Supervision
3.152
3.153
3.154
(b) Other guidelines and good practices
3.155
3.156
3.157
3.158
3.2.12 International Association of Deposit Insurers (IADI)
3.159
3.160
3.2.12.1 Structure and membership
3.161
3.162
3.163
3.2.12.2 Activities
3.164
3.165
(a) Core Principles for Effective Deposit Insurance Systems
3.166
3.167
3.168
3.169
3.170
3.2.13 Markets Committee
3.171
3.2.13.1 History
3.172
3.173
3.2.13.2 Structure
3.174
3.2.13.3 Membership
3.175
3.2.13.4 Activities
3.176
(a) Monetary Policy Frameworks and Central Bank Market Operations
3.177
3.2.14 Irving Fisher Committee on Central Bank Statistics (IFC)
3.178
3.2.14.1 History
3.179
3.180
3.2.14.2 Structure
3.181
3.2.14.3 Membership
3.182
3.183
3.184
3.2.14.4 Activities
3.185
3.2.15 International Financial Consumer Protection Organisation (FinCoNet)
3.186
3.2.15.1 History
3.187
3.188
3.189
3.2.15.2 Structure
3.190
3.191
3.2.15.3 Membership
3.192
3.193
3.2.15.4 Activities
3.194
3.3 Accounting and Audit
3.3.1 International Financial Reporting Standards Foundation (IFRSF) and International Accounting Standards Board (IASB)
3.195
3.196
3.3.1.1 Structure and membership
3.197
3.198
3.199
3.200
3.3.1.2 Activities
(a) IFRS Standards
3.201
3.202
3.203
3.204
3.205
3.206
3.3.2 International Auditing and Assurance Standards Board (IAASB)
3.207
3.208
3.3.2.1 Structure and membership
3.209
3.210
3.211
3.212
3.3.2.2 Activities
3.213
(a) International Standards on Auditing (ISAs)
3.214
3.4 UK Firms Participating in Industry Bodies
3.215
3.4.1 International Swaps and Derivatives Association (ISDA)
3.216
3.4.1.1 Structure and membership
3.217
3.218
3.4.1.2 Activities
3.219
3.4.2 International Capital Market Association (ICMA)
3.220
3.221
3.4.2.1 Structure and membership
3.222
3.223
3.224
3.4.2.2 Activities
3.225
3.226
(a) Primary Market Handbook (Handbook)
3.227
(b) Rules and Recommendations for the Secondary Market
3.228
3.229
3.4.3 International Securities Lending Association (ISLA)
3.230
3.4.3.1 Structure and membership
3.231
3.232
3.4.3.2 Activities
3.233
3.234
3.4.4 The Institute of Asset Management (IAM)
3.235
3.4.4.1 Structure and membership
3.236
3.237
3.4.4.2 Activities
3.238
(a) Developing and maintaining a strategic asset management plan
3.239
3.240
3.241
(b) IAM Handbook
3.242
3.243
(c) Subject Specific Guidelines (SSGs)
3.244
3.245
3.5 Conclusion
3.246
3.247
3.248
3.249
3.250
3.251
3.252
3.253
4 EU Equivalence Regime
4.1 Introduction
4.01
4.02
4.03
4.04
4.2 The Concept of Equivalence
4.05
4.06
4.07
4.08
4.09
4.10
4.3 Current Status and Timing
4.11
4.12
4.13
4.4 Remaining Equivalent Following Brexit: Onshoring of EU Law
4.14
4.15
4.16
4.17
4.5 Third Countries and Member States
4.18
4.19
4.20
4.6 Equivalence at the EU Level
4.21
4.22
4.23
4.7 Equivalence Decisions
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.8 Banking Framework
4.37
4.38
4.39
4.40
4.9 Investment Services
4.41
4.42
4.43
4.44
4.45
4.46
4.47
4.48
4.10 Market Infrastructure
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
4.11 Recognition of UK CCPs and CSDs
4.57
4.58
4.59
4.60
4.12 EMIR and Derivatives
4.61
4.62
4.63
4.64
4.65
4.13 Investment Funds
4.66
4.67
4.68
4.69
4.70
4.71
4.72
4.73
4.74
4.75
4.76
4.77
4.78
4.79
4.80
4.81
4.82
4.83
4.84
4.85
4.86
4.87
4.88
4.14 Insurance and Reinsurance Framework
4.89
4.90
4.91
4.92
4.93
4.94
4.15 Benchmark Administrators
4.95
4.96
4.97
4.98
4.16 Issuers
4.99
4.100
4.101
4.102
4.103
4.104
4.105
4.106
4.107
4.108
5 The EU Approach to Authorisation
5.1 Introduction
5.01
5.02
5.03
5.04
5.05
5.06
5.07
5.2 Background
5.08
5.09
5.10
5.3 The ESMA Opinions
5.3.1 Legal Basis
5.11
5.12
5.3.2 The ESMA Cross-Sectoral Opinion
5.3.2.1 Purpose and scope
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20
5.3.2.2 The general principles
(a) Principle one: no automatic recognition of existing authorisations
5.21
(b) Principle two: authorisation granted by EU27 NCAs should be rigorous and efficient
5.22
(c) Principle three: NCAs should be able to verify the objective reasons for relocations
5.23
5.24
(d) Principle four: special attention should be granted to avoid letter-box entities in the EU27
5.25
5.26
5.27
5.28
(e) Principle five: outsourcing and delegation to third countries is only possible under strict conditions
5.29
(f) Principle six: NCAs should ensure that substance requirements are met
5.30
(g) Principle seven: NCAs should ensure sound governance of EU entities
5.31
5.32
(h) Principle eight: NCAs must be in a position to effectively supervise and enforce Union law
5.33
5.34
(i) Principle nine: coordination to ensure effective monitoring by ESMA
5.35
5.36
5.3.3 The ESMA Sector-Specific Opinions
5.37
5.3.4 The ESMA Investment Firms Opinion
5.3.4.1 Purpose and scope
5.38
5.39
5.40
5.41
5.3.4.2 Authorisation
5.42
5.43
5.44
5.45
5.46
5.47
5.3.4.3 Substance requirements
(a) Governance and internal controls
(i) Sound governance and effective internal control mechanisms
5.48
5.49
5.50
5.51
5.52
(ii) Appropriate financial and non-financial resources and programme of operations
5.53
(iii) Proportionality
5.54
(b) Outsourcing
(i) Assessment of outsourcing arrangements
5.55
5.56
5.57
5.58
5.59
5.60
(ii) Due diligence
5.61
5.62
(iii) Substance and outsourcing of critical functions/services
5.63
5.64
5.65
(c) Non-EU branches
5.66
5.67
5.3.4.4 Effective supervision
5.68
5.3.5 The ESMA Secondary Markets Opinion
5.3.5.1 Purpose and scope
5.69
5.70
5.71
5.72
5.73
5.3.5.2 Key and important activities
5.74
5.75
5.76
5.77
5.78
5.79
5.3.6 The ESMA Investment Management Opinion
5.3.6.1 Purpose and scope
5.80
5.81
5.82
5.83
5.84
5.85
5.3.6.2 Governance and internal control
(a) Sound governance
5.86
5.87
(b) Calibration of governance structures and internal control mechanisms
5.88
5.89
(c) White-label business
5.90
5.91
5.3.6.3 Delegation
5.92
5.93
5.94
5.95
5.96
5.97
5.98
5.4 The EBA Opinions
5.4.1 Legal Basis
5.99
5.100
5.4.2 The EBA 2017 Opinion
5.4.2.1 Purpose and scope
5.101
5.102
5.103
5.104
5.105
5.4.2.2 Authorisation and equivalence
(a) General
5.106
5.107
5.108
5.109
(b) Credit institutions
5.110
5.111
5.112
5.113
5.114
5.115
(c) Investment firms
5.116
5.117
5.118
(d) Payment institutions and electronic money institutions
5.119
5.120
5.121
(e) Credit intermediaries and non-credit institutions admitted under Directive 2014/17
5.122
5.4.2.3 Internal model approvals
5.123
5.124
5.4.2.4 Internal governance and risk management
5.125
5.126
5.4.2.5 Resolution and deposit guarantee schemes
(a) Resolution
5.127
5.128
5.129
(b) Deposit guarantee schemes
5.130
5.4.3 The EBA 2018 Opinion
5.4.3.1 Purpose and scope
5.131
5.132
5.4.3.2 Risk assessment and preparedness
5.133
(a) Customer communication
5.134
5.5 The Withdrawal Agreement, the Political Declaration, and the Interim Legislation
5.5.1 Background
5.135
5.136
5.137
5.5.2 Decision 2018/2030
5.138
5.139
5.140
5.5.3 Decision 2018/2031
5.141
5.142
5.143
5.5.4 Regulation 2019/396
5.144
5.145
5.5.5 Regulation 2019/397
5.146
6 The EU Approach to Authorisation: Germany, France, the Netherlands, and Ireland
6.1 Introduction
6.01
6.02
6.03
6.2 Germany
6.2.1 Introduction
6.04
6.05
6.2.2 German Brexit Legislation
6.2.2.1 Overview
6.06
6.07
6.08
6.2.2.2 Scope of general transitional regime
6.09
6.10
6.11
6.2.2.3 General transitional periods
6.12
6.13
6.14
6.2.2.4 Limitations of the general transitional periods
6.15
6.16
6.17
6.2.2.5 Specific relief measure for proprietary business
6.18
6.19
6.20
6.2.3 National Approach to Authorisation
6.21
6.2.3.1 Competent authorities
6.22
6.23
6.2.3.2 Territorial scope of German licensing requirements
6.24
6.2.3.3 Reverse solicitation exemption
6.25
6.26
6.2.3.4 Exemption of cross-border services in the individual case
6.27
6.28
6.2.3.5 Administrative guidance for licence applications
6.29
6.30
6.31
6.32
6.2.3.6 Substance requirements in Germany
6.33
6.3 France
6.3.1 Introduction
6.34
6.3.2 French Competent Authorities
6.35
6.3.3 French Approach to a No-Deal Brexit
6.36
6.37
6.38
6.39
6.3.4 Continuity of Contracts
6.40
6.41
6.3.5 French Monopoly
6.42
6.3.6 Territorial Application of the French Monopoly
6.43
6.3.7 Reverse Solicitation Exemption
6.44
6.3.8 Standard Procedure for Non-EEA Entities Following Exit Day
6.45
6.3.9 French Guidelines in Relation to the Use of Third Party Employees or Technical Means
6.46
6.3.10 Required Substance in France
6.47
6.3.11 Outsourcing Arrangements
6.48
6.49
6.50
6.3.12 ‘Dual-hatting’ within Group Entities
6.51
6.52
6.4 Netherlands
6.4.1 Introduction
6.53
6.54
6.4.2 Dutch Brexit Legislation
6.4.2.1 Dutch Brexit Act
6.55
6.56
6.57
6.58
6.4.2.2 Exemption for investment firms
6.59
6.60
6.61
6.62
6.63
6.64
6.4.3 Dutch Regulators
6.65
6.4.3.1 Netherlands Authority for the Financial Markets
6.66
6.4.3.2 Dutch Central Bank
6.67
6.4.3.3 Ministry of Finance
6.68
6.4.4 Licence Obligation and Exemptions
6.69
6.4.4.1 Initiative test/reverse solicitation
6.70
6.4.4.2 Exemption to the licence obligation
6.71
6.4.5 Licence Application Procedure
6.4.5.1 Regulated market
6.72
6.4.5.2 Investment services
6.73
6.74
6.4.5.3 Substance
6.75
6.76
6.4.5.4 Licence fees
6.77
6.4.6 Declaration of No Objection
6.4.6.1 Investment firm
6.78
6.79
6.80
6.81
6.4.6.2 Regulated market
6.82
6.83
6.84
6.85
6.86
6.4.7 Enforcement powers of regulators
6.87
6.88
6.89
6.5 Ireland
6.5.1 Background
6.90
6.91
6.5.2 Brexit Contingency Planning
6.92
6.93
6.5.3 Authorisation of AIFMs, UCITS Management Companies, and MiFID Investment Firms in Ireland
6.94
6.95
6.96
6.97
6.98
6.99
6.5.4 Treatment of Third Country Firms under Irish Law
6.100
6.5.4.1 Providing services to, or engaging in investment activities with, Irish clients under MIFID
6.101
6.102
6.103
6.104
6.105
6.106
6.5.4.2 Third country firms as AIFMs under the AIFM Directive
6.107
6.5.4.3 Third country firms marketing AIFs under the AIFM Regulations
6.108
6.109
6.5.5 Key Requirements for Authorisation in Ireland
6.5.5.1 The influence of ESMA on the authorisation requirements
6.110
6.111
6.112
6.113
6.5.5.2 Head office and registered office in Ireland
6.114
6.115
6.116
6.5.5.3 Substance in Ireland
(a) Irish resident directors, directors to direct the business, and independent directors
6.117
6.118
6.119
6.5.5.4 AIFMs and UCITS management companies: managerial functions
6.120
6.5.5.5 AIFMs and UCITS management companies: senior management location rule
6.121
6.122
6.5.5.6 Fitness and probity regime
6.123
6.124
6.5.5.7 Financial control, compliance, and risk management
6.125
6.126
6.5.5.8 Staffing
6.127
6.5.6 The Authorisation Process
6.5.6.1 Initial contact with the Central Bank
6.128
6.5.6.2 Key facts document (KFD)
6.129
6.130
6.5.6.3 Preliminary meeting with the Central Bank
6.131
6.5.6.4 Application
6.132
6.133
6.134
6.5.6.5 Timing
6.135
6.136
6.137
6.138
7 The UK Supervisory Regime in the Post-Brexit Environment
7.1 Introduction
7.01
7.02
7.03
7.04
7.05
7.06
7.07
7.2 The Entangled Nature of the UK and EU Frameworks
7.08
7.09
7.10
7.2.1 The Growing Influence of Europe from the Late 1990s
7.11
7.12
7.2.2 The Shift towards ‘More Europe’ after the 2007–8 Financial Crisis
7.13
7.14
7.2.3 The Growing Power of the ESAs
7.15
7.16
7.17
7.18
7.2.4 Accelerating Loss of National Discretion
7.19
7.20
7.3 UK Framework for Financial Services Legislation and Regulation
7.21
7.22
7.23
7.24
7.25
7.26
7.4 A ‘Bonfire of Regulation’?
7.27
7.28
7.29
7.30
7.31
7.32
7.33
7.34
7.35
7.36
7.37
7.5 The EU (Withdrawal) Act 2018
7.38
7.39
7.40
7.5.1 Retained EU Law
7.41
7.42
7.5.2 Retained EU Case Law
7.43
7.5.3 Remedying Deficiencies in Retained Law
7.44
7.45
7.46
7.47
7.48
7.5.4 Powers of UK Parliament to Make Secondary Legislation
7.49
7.50
7.51
7.52
7.53
7.6 Statutory Instruments under the EU Withdrawal Act
7.54
7.55
7.56
7.57
7.58
7.7 Minimising Disruption
7.59
7.7.1 Implementation Period in the Event of a UK–EU Withdrawal Agreement
7.60
7.61
7.62
7.63
7.64
7.7.2 Temporary Transitional Powers for UK Regulators in the Event of a ‘No Deal’ Brexit
7.65
7.66
7.67
7.68
7.8 Allocation of Powers to UK Regulators
7.69
7.70
7.71
7.72
7.73
7.74
7.75
7.9 The Bank of England’s Approach to Onshoring
7.76
7.77
7.78
7.79
7.10 The FCA’s Approach to Onshoring
7.80
7.11 The PSR’s Approach to Onshoring
7.81
7.12 The UK Regulators’ Approach to Non-Legislative EU Materials
7.82
7.83
7.84
7.85
7.86
7.87
7.88
7.89
7.13 The Impact of Brexit on the FCA Handbook
7.90
7.91
7.92
7.14 The Impact of Brexit on the PRA Rulebook
7.93
7.94
7.95
7.96
7.15 The Overseas Persons’ Exclusion after Brexit
7.97
7.98
7.99
7.100
7.101
7.102
7.16 Reallocation of Supervisory Powers
7.103
7.104
7.105
7.106
7.107
7.108
7.109
7.17 Regulatory Cooperation
7.110
7.111
7.112
7.18 Treatment of ‘In Flight’ Legislation
7.113
7.114
7.19 Impact of a ‘No-Deal’ Scenario
7.115
7.116
7.117
7.20 Conclusion
7.118
7.119
7.120
7.121
7.122
8 PRA Approach to the Authorisation of International Branches and Subsidiaries
8.1 Introduction
8.01
8.02
8.03
8.04
8.05
8.06
8.07
8.1.1 PRA Approach to Bank Branches
8.08
8.09
8.10
8.11
8.1.2 PRA Approach to (Re)insurer Branches
8.12
8.1.3 Transitional Arrangements and Timing Considerations
8.13
8.14
8.15
8.16
8.17
8.18
8.19
8.20
8.1.4 Remaining Chapter Summary
8.21
8.2 General Differences between Branches and Subsidiaries
8.22
8.23
8.24
8.25
8.26
8.27
8.3 Banks: PRA’s Approach to Significant Retail Activities
8.28
8.29
8.30
8.31
8.32
8.3.1 Size of Retail Deposit Base
8.33
8.3.2 Size of FSCS-Protected Deposit Base
8.34
8.35
8.36
8.37
8.3.3 How Should Banks Assess Their Position under the Updated ‘Significant Retail’ Approach?
8.38
8.3.4 Which Customers?
8.39
8.40
8.3.5 Which Accounts?
8.41
8.42
8.4 ‘Wholesale’ Banks: PRA’s General Approach to Branch Authorisation and Supervision (Where No Significant Retail Activities)
8.43
8.44
8.4.1 The Wholesale or ‘General Approach’ to Branch Authorisation and Supervision
8.45
8.46
8.47
8.48
8.4.2 The PRA’s and FCA’s Threshold Conditions for Authorisation
8.49
8.50
8.4.3 PRA
8.51
8.52
8.53
8.54
8.4.4 FCA
8.55
8.56
8.57
8.4.5 Equivalence Standards
8.58
8.59
8.60
8.61
8.4.6 Supervisory Cooperation Arrangements
8.62
8.63
8.64
8.65
8.4.7 Assurance over Resolution Arrangements
8.66
8.67
8.68
8.69
8.70
8.4.8 Considerations for Banks
8.71
8.72
8.5 Banks: PRA’s Approach to ‘Systemic’ Wholesale Branches
8.73
8.5.1 Which Branches Qualify as ‘Systemic’?
8.74
8.75
8.76
8.5.2 How Is the Supervisory Experience Different from Non-Systemic Branches?
8.77
8.78
8.79
8.5.3 Booking Models
8.80
8.6 Banks: Application Process
8.81
8.82
8.83
8.84
8.85
8.86
8.87
8.88
8.89
8.90
8.7 Banks: Implications of the Transition to Overseas Branch or Subsidiary Status
8.7.1 UK Branches
8.91
8.92
8.7.1.1 PRA rules
8.7.1.2 PRA and FCA rules
8.7.1.3 FCA Rules
8.93
8.7.2 UK Subsidiaries
8.94
8.7.3 TPR Implications
8.95
8.96
8.97
8.98
8.7.4 FSCR
8.99
8.8 Overseas (Re)insurers: General PRA Approach to Authorisation
8.100
8.101
8.102
8.103
8.104
8.105
8.8.1 PRA Approach to EEA (Re)insurers Post-Brexit
8.106
8.107
8.108
8.109
8.110
8.111
8.8.2 TPR Implications
8.112
8.113
8.114
8.8.3 FSCR
8.115
8.9 Overseas (Re)insurers: PRA Approach to UK Branches—Factors to Be Considered
8.116
8.117
8.9.1 New Factors to Be Considered by PRA
8.118
8.119
8.120
8.9.2 Scale of UK Branch Activity Covered by the FSCS
8.121
8.122
8.123
8.9.3 Impact of Branch Failure on the Wider Insurance Market and Financial System
8.124
8.125
8.126
8.9.4 Cross-border Services Business
8.127
8.128
8.129
8.130
9 The UK’s Senior Managers, Certification and Conduct Regime
9.1 Introduction
9.01
9.02
9.03
9.2 Summary of the Relevant Background
9.04
9.05
9.06
9.07
9.3 Applicability of Different SMCR Regimes with Brexit
9.08
9.09
9.10
9.3.1 Deemed Approval for SMFs
9.11
9.3.2 Challenges
9.12
9.4 Responsibility for Changing Regulatory Requirements during Brexit
9.13
9.14
9.15
9.16
9.5 Practical Implications of Moving between Regimes
9.17
9.18
9.19
9.20
9.6 Responsibility for Cross-border Business into the UK
9.21
9.22
9.23
9.6.1 Appointed Representatives
9.24
9.6.2 Dual-Hatting
9.25
9.7 Impact on Certification and Conduct Regimes
9.26
9.27
9.28
9.8 Insourcing and Outsourcing
9.29
9.30
9.31
9.9 Enforcement against non-UK Resident Senior Managers
9.32
9.33
9.9.1 Supervisory Powers
9.34
9.35
9.9.2 Enforcement Powers
9.36
9.37
9.38
9.39
9.9.3 Enforcement Tools
9.40
9.9.4 Practical Enforcement against non-UK Resident Senior Managers
9.41
9.9.4.1 Private and public warnings, withdrawal or suspension of approval, placing limitations or restrictions on approval, and Prohibition Orders
9.42
9.43
9.9.4.2 Enforcing fines outside the UK
9.44
9.9.4.3 Commence court proceedings
9.45
9.9.5 Other Consequences
9.46
9.47
10 Markets in Financial Instrument Directive II (MiFID II)/Markets in Financial Instruments Regulation (MiFIR)
10.1 Introduction
10.1.1 From MiFID to MiFID II
10.01
10.02
10.03
10.1.1.1 The scope of the new directive
10.04
10.05
10.06
10.07
10.1.1.2 Structure of the chapter
10.08
10.2 Regulation under MIFID II
10.2.1 The Structure of MIFID II
10.09
10.2.2 Exchanges and Clearing Houses
10.2.2.1 Exchanges
10.10
10.2.2.2 Clearing houses
(a) The role of clearing houses
10.11
10.12
(b) Clearing houses’ exposure to default
10.13
10.2.2.3 Application of MiFID II to financial trading infrastructure
(a) Distinguishing between on-exchange and OTC markets
10.14
10.15
10.16
10.2.3 The Regulation of Markets under MiFID II
10.2.3.1 Markets and trading platforms
10.17
10.18
10.19
(a) Regulated markets
10.20
(b) Multilateral trading facilities
10.21
(c) Organised trading facilities
10.22
10.23
(d) Systematic internalisers
10.24
10.25
10.26
10.27
10.28
10.29
(e) OTC trading
10.30
10.3 Rights of Operation and Access
10.3.1 Authorisation of Exchanges in the UK
10.3.1.1 Listing of securities on an exchange
10.31
10.32
(a) The UK Listing Authority (the ‘competent authority’)
10.33
(b) Recognised investment exchanges and recognised overseas investment exchanges
10.34
10.35
10.36
10.37
10.3.2 Authorisation of Trading Infrastructure in the EU
10.3.2.1 Authorisation of exchanges in the EU
(a) ‘Investment firms’ and ‘market operators’
10.38
(b) The provisions for the authorisation of investment firms and regulated markets are different
10.39
10.40
10.41
10.42
10.3.2.2 Authorisation of clearing houses and settlement systems in the EU
(a) Clearing houses and payment and settlement systems
10.43
10.44
(b) The impact of MiFID II on clearing and settlement systems
10.45
10.3.3 Access for EU Investment Firms to Trading Infrastructure in other Member States
10.3.3.1 ‘Passporting’ for investment firms
10.46
10.47
10.3.3.2 Cross-border operation of multilateral trading facilities and regulated markets
10.48
10.49
(a) Access to the regulated markets of other Member States
10.50
10.51
10.3.3.3 Access to clearing houses and settlement systems
10.52
10.53
10.3.4 Access for Non-EU Investment Firms to Trading Infrastructure in the EU
10.3.4.1 Limited access for third country firms
10.54
10.55
(a) Cross-border provision of services subject to regulatory equivalence
10.56
10.57
10.58
(b) Establishing a branch in a Member State
10.59
10.60
10.61
10.62
10.4 The Potential Impact of Brexit
10.4.1 Introduction
10.63
10.64
10.4.2 Key Areas of Impact
10.4.2.1 Three types of concern
10.65
10.66
10.4.2.2 Applicability of EU regulation to UK firms
(a) Legal status of MiFID II and MiFIR after Brexit
10.67
10.68
10.69
(b) The effect of future EU legislation
10.70
10.71
10.72
10.73
10.4.2.3 Access requirements
(a) Passporting or equivalence
10.74
10.75
10.76
10.77
10.78
(b) Euro clearing
10.79
10.80
10.81
(c) Recognition of EU-based clearing houses in the UK
10.82
10.4.3 Case Study
10.83
10.84
10.85
10.86
11 Capital Requirements Directive (CRD IV)/Capital Requirements Regulation (CRR)
11.1 Introduction
11.01
11.02
11.03
11.2 How Does the CRD IV/CRR Regime Differ from Other Sectors in Respect of Passporting and Equivalence Tests?
11.2.1 EU Financial Services
11.04
11.05
11.2.2 Barriers to a Single Market
11.06
11.07
11.08
11.09
11.2.3 Financial Services Passport
11.10
11.11
11.12
11.13
11.14
11.15
11.16
11.2.4 Impact of Brexit on Passporting
11.17
11.18
11.19
11.20
11.21
11.2.5 Third Country Regimes
11.22
11.23
11.24
11.25
11.26
11.27
11.28
11.29
11.30
11.31
11.32
11.3 The Handling of Prudential Requirements under the UK’s Authorisation of EU Bank Branches
11.3.1 Current Framework
11.33
11.34
11.35
11.36
11.3.1.1 Impact of Brexit
11.37
11.38
11.3.2 UK Authorisation
11.39
11.40
11.41
11.42
11.43
11.44
11.45
11.46
11.3.3 Retail Activities
11.47
11.3.4 Systemic Wholesale Branches
11.48
11.49
11.4 Collaboration and Information Sharing
11.50
11.51
11.52
11.53
11.54
11.5 Setting Capital Buffer Requirements
11.55
11.6 EU Intermediate Holding Company Regime
11.6.1 Reforms under CRD V Package
11.56
11.57
11.58
11.59
11.60
11.6.2 Threshold and Application
11.61
11.62
11.63
11.64
11.65
11.6.3 Impact on Third Country Groups
11.66
11.67
11.6.4 Impact of Brexit
11.68
11.69
11.7 Impact of Brexit on Risk Weights of EU and UK Exposures and Liquidity
11.70
11.71
11.72
11.73
11.74
11.75
11.8 CRD Remuneration Provisions: Variable Remuneration
11.8.1 Background
11.76
11.77
11.78
11.8.2 UK Regulatory Approach to Implementation of CRD IV Remuneration Requirements
11.79
11.80
11.81
11.8.3 UK Current Position on Bonus Cap
11.82
11.83
11.84
11.85
11.86
11.87
11.88
11.89
11.9 Supervision of Banking Groups and Consolidation
11.90
11.91
11.92
11.93
11.94
11.95
11.96
11.97
11.98
11.99
11.100
11.101
11.102
11.10 Securitisation
11.10.1 Background
11.103
11.104
11.105
11.106
11.107
11.10.2 Securitisation Regulation and Brexit
11.108
11.109
11.110
11.111
11.112
11.113
11.114
11.115
12 Bank Recovery and Resolution Directive (BRRD)
12.1 Introduction
12.01
12.02
12.03
12.2 Background to the UK Regime
12.2.1 UK Framework
12.04
12.05
12.06
12.2.2 BRRD Framework
12.07
12.08
12.09
12.10
12.11
12.12
12.13
12.2.3 UK Implementation of the BRRD Framework
12.14
12.15
12.16
12.3 Overview of UK Legislation That Will Amend the UK Regime
12.17
12.18
12.3.1 The BRR Brexit Regulations
12.19
12.20
12.21
12.22
12.3.2 The Regulators’ Powers Regulations
12.23
12.3.3 Regulators’ Transitional Powers
12.24
12.3.4 Guidelines and Recommendations
12.25
12.3.5 BRRD II
12.26
12.27
12.4 What the UK Regime Will Look Like after Brexit
12.4.1 Overview of the Regime
12.28
12.29
12.30
12.4.2 Preparatory Measures: Recovery Plans
12.31
12.32
12.33
12.34
12.35
12.36
12.37
12.38
12.4.3 Preparatory Measures: Resolution Planning
12.39
12.40
12.41
12.42
12.4.4 Preparatory Measures: Intragroup Financial Support Arrangements
12.43
12.44
12.45
12.46
12.4.5 Early Intervention
12.47
12.4.6 Resolution: Conditions
12.48
12.49
12.50
12.4.7 Stabilisation Options: Overview
12.51
12.52
12.53
12.4.8 Stabilisation Options: Bail-in
12.54
12.55
12.56
12.57
12.58
12.59
12.4.9 MREL Reforms: External TLAC
12.60
12.61
12.62
12.63
12.64
12.65
12.66
12.67
12.68
12.69
12.4.10 MREL Reforms: Eligible Liabilities
12.70
12.4.11 MREL Reforms: Internal TLAC
12.71
12.72
12.4.12 Stabilisation Options: Moratorium Tool
12.73
12.4.13 Government Stabilisation Tools
12.74
12.4.14 Cross-border Group Resolution
12.75
12.76
12.77
12.78
12.79
12.4.15 Depositor Preference
12.80
12.5 Conclusion
12.81
12.82
12.83
13 European Markets Infrastructure Regulation (EMIR) and Euro Clearing
13.1 Introduction
13.01
13.02
13.1.1 EMIR
13.03
13.04
13.05
13.06
13.07
13.08
13.1.2 Territoriality
13.09
13.10
13.1.3 Sources
13.11
13.12
13.1.4 EMIR REFIT
13.13
13.1.5 UK Supervisory Responsibility for EMIR
13.14
13.2 The EU Withdrawal Act and ‘Onshoring’
13.2.1 Background
13.15
13.16
13.17
13.2.2 EUWA
13.18
13.19
13.2.3 Incorporation of EMIR and Delegated Legislation in UK Law
13.20
13.21
13.22
13.23
13.2.4 Ensuring EMIR Operates Effectively and Correcting Deficiencies
13.24
13.25
13.26
13.27
13.2.5 Policy Choices in Creating Onshored Legislation
13.28
13.29
13.30
13.3 Onshoring EMIR and the Delegated Legislation Made under It
13.31
13.32
13.33
13.34
13.35
13.36
13.4 Implications of Exit and Onshoring
13.37
13.38
13.4.1 Exit
13.39
13.4.2 Onshoring
13.40
13.41
13.5 CCP SI
13.5.1 Background
13.42
13.43
13.5.2 Amendments to Onshored EMIR
13.44
13.45
13.46
13.47
13.48
13.49
13.50
13.51
13.5.3 Transitional Relief: Temporary Deemed Recognition
13.52
13.53
13.5.4 Mechanisms to Facilitate Equivalence Assessments and Recognition in Advance of Exit Day
13.54
13.5.5 Other Changes to CCP Regulation
13.55
13.5.6 Recognition of UK CCPs under EMIR
13.56
13.6 Trade Repository SI
13.6.1 Background
13.57
13.58
13.6.2 Amendments to Onshored EMIR
13.59
13.60
13.61
13.62
13.63
13.6.3 Transitional Relief: Temporary Deemed Recognition for UK Affiliates
13.64
13.6.4 Other Changes to Trade Repository Regulation
13.65
13.7 EMIR SI
13.66
13.7.1 Scope and Exemptions
13.67
13.68
13.69
13.70
13.71
13.7.2 Definition of OTC Derivative: Exclusion of EU27 Exchange-Traded Derivatives
13.72
13.73
13.74
13.7.3 Definition of OTC Derivative: C6 Energy Derivatives
13.75
13.76
13.77
13.7.4 Exemptions for Intragroup Transactions
13.78
13.79
13.80
13.81
13.7.5 Clearing Obligation
13.82
13.83
13.84
13.7.6 Reporting Obligation
13.85
13.86
13.87
13.88
13.7.7 Risk Mitigation Obligations
13.89
13.90
13.91
13.7.8 Trade Repository Regulation
13.92
13.93
13.8 Standstill
13.94
13.95
13.96
13.97
13.98
13.8.1 Scope
13.99
13.100
13.101
13.102
13.8.2 Exceptions
13.103
13.8.3 Effect
13.104
13.9 Implications for Market Participants
13.105
13.106
13.107
13.108
13.109
14 Benchmarks Regulation
14.1 Introduction
14.01
14.02
14.03
14.04
14.2 The History of the Regulation of Benchmarks in the UK
14.2.1 International Initiatives: IOSCO Principles
14.05
14.06
14.07
14.08
14.2.2 UK Initiative: Regulation of Specified Benchmarks
14.09
14.10
14.11
14.12
14.13
14.14
14.15
14.2.3 The Benchmarks Regulation
14.16
14.17
14.18
14.3 The Regulation of Benchmarks in the UK
14.3.1 The UK’s Post-Brexit Approach to the Benchmarks Regulation
14.19
14.20
14.21
14.22
14.3.2 The Purpose of the Benchmarks Regulation
14.23
14.24
14.25
14.26
14.3.3 The Meaning of a ‘Benchmark’
14.27
14.28
14.29
14.3.4 Scope of the Benchmarks Regulation
14.30
14.31
14.32
14.3.5 Restriction on the Use of Benchmarks
14.33
14.34
14.35
14.36
14.3.6 Authorisation and Registration of Benchmark Administrators
14.3.6.1 Requirement to be authorised or registered
14.37
14.38
14.39
14.40
14.3.6.2 The differences between authorisation and registration
14.41
14.42
14.43
14.44
14.45
14.46
14.47
14.3.6.3 Impact of Brexit
14.48
14.49
14.50
14.3.7 Requirements Applicable to Benchmark Administrators
14.51
14.3.8 Benchmark Categories
14.52
14.53
14.3.8.1 The categories of benchmark under the EU regime
(a) Critical benchmarks
14.54
14.55
14.56
14.57
(b) Significant benchmarks
14.58
14.59
14.60
(c) Non-significant benchmarks
14.61
14.62
14.63
(d) Regulated-data, commodity, and interest rate benchmarks
14.64
14.65
14.66
14.3.8.2 Adapting the categories of benchmarks for the UK regime
14.67
(a) Critical benchmarks
14.68
14.69
14.70
(b) Significant benchmarks
14.71
14.72
14.73
14.3.9 Requirements Applicable to Benchmark Contributors
14.74
14.75
14.76
14.3.10 Transitional Provisions
14.3.10.1 Transitional provisions: benchmark administrators
14.77
14.78
14.79
14.80
(a) Index provider providing a benchmark on 30 June 2016
(b) FCA option to register rather than authorise
(c) Index provider providing an existing benchmark on 1 January 2018
(d) Competent authority/FCA option to allow use of a benchmark which does not meet requirements under certain conditions
14.81
14.82
14.3.10.2 Transitional provisions: supervised contributors
14.83
14.84
14.4 Brexit and the Benchmarks Regulation: Cross-border Issues
14.4.1 Introduction
14.85
14.86
14.87
14.88
14.4.2 The Impact of Brexit on benchmark administrators Based in the UK
14.89
14.90
14.91
14.4.2.1 Option 1: equivalence
14.92
14.93
14.94
14.4.2.2 Option 2: recognition
14.95
14.96
(a) Requirements for recognition
14.97
14.98
14.99
14.100
(b) Process for obtaining recognition
14.101
14.102
14.103
14.104
14.105
14.106
14.4.2.3 Option 3: endorsement
14.107
14.108
14.109
14.4.2.4 Transitional provisions
14.110
14.111
14.112
14.4.3 The Impact of Brexit on Benchmark Administrators Based in the EU
14.4.3.1 The UK third country regime
14.113
14.114
14.115
14.4.3.2 Transitional provisions
14.116
14.4.3.3 Brexit-specific provisions
14.117
14.4.4 The Impact of Brexit on Benchmark Administrators Based Outside the EU and the UK
14.118
14.119
14.120
14.121
14.4.5 The Impact of Brexit on Users of Benchmarks in the EU
14.122
14.4.6 The Impact of Brexit on Benchmark Users Based in the UK
14.123
14.5 Updates after July 2019
14.124
14.125
14.126
14.127
14.128
14.129
14.130
14.131
14.6 Conclusion
14.132
14.133
15 Alternative Investment Fund Managers Directive (AIFMD)
15.1 Summary
15.01
15.02
15.03
15.04
15.05
15.06
15.07
15.08
15.09
15.2 AIFMD on Brexit
15.10
15.11
15.12
15.3 AIFMD: an Overview of the Position Today
15.3.1 Background and Legislative Intent
15.13
15.14
15.15
15.16
15.17
15.18
15.3.2 Application of AIFMD to Managers
15.19
15.20
15.3.3 Full Scope AIFMs
15.21
15.22
15.23
15.3.4 Sub-Threshold AIFMs
15.24
15.25
15.26
15.3.5 Non-EEA AIFMs
15.27
15.28
15.29
15.30
15.31
15.3.6 Delegation Arrangement
15.32
15.33
15.34
15.35
15.36
15.4 Marketing: Differences between the Passport and NPPR
15.4.1 What Is Marketing?
15.37
15.38
15.39
15.40
15.41
15.4.2 Passport
15.42
15.43
15.4.3 Marketing without the Passport
15.44
15.45
15.46
15.4.4 Reverse Solicitation
15.47
15.48
15.49
15.50
15.4.5 Where Does Marketing Take Place?
15.51
15.52
15.4.6 Marketing by Third-Party Entities
15.53
15.54
15.55
15.56
15.5 Cross-border Distribution of Collective Funds: Changes to Come
15.57
15.58
15.59
15.60
15.61
15.62
15.63
15.64
15.65
15.66
15.67
15.6 Impact of Brexit
15.68
15.69
15.6.1 UK AIFMs in the UK
15.70
15.71
15.72
15.6.2 UK AIFMs in the EEA
15.73
15.74
15.75
15.6.3 UK Distributors into the EEA
15.76
15.77
15.6.4 EEA AIFMs in the UK
15.78
15.79
15.80
15.6.5 Delegation Arrangements
15.81
15.7 The Future of AIFMD in the UK and Europe
15.82
15.7.1 Application in UK
15.83
15.84
15.85
15.7.2 Passport
15.86
15.87
15.88
15.89
15.90
15.7.3 AIFMD 2/1.2
15.91
15.92
16 Solvency II Directive (Solvency II)
16.1 Introduction
16.1.1 Legislative Background
16.01
16.02
16.03
16.04
16.05
16.06
16.07
16.08
16.09
16.10
16.1.2 Preserving the Acquis
16.11
16.12
16.13
16.14
16.15
16.2 The Position of European Insurers Operating in the United Kingdom
16.2.1 Licensing Issues
16.16
16.17
16.18
16.2.1.1 Inbound EEA authorised insurers passporting into the UK
(a) UK regulatory landscape for insurers
16.19
16.20
16.21
(b) Passporting into the UK and the impact of Brexit
16.22
16.23
(c) The temporary permission regime
16.24
16.25
16.26
(i) Implementation of the TPR
16.27
(ii) Timing of authorisation
16.28
(iii) Requirement to apply for authorisation
16.29
(iv) Regulation in the TPR
16.30
16.31
(v) Cross-border business of TPR firms
16.32
(d) Post-TPR
16.33
16.2.1.2 EEA authorised insurers conducting business in the UK on an offshore basis
16.34
16.35
16.36
(a) Applicable regulation and guidance
16.37
16.38
16.39
(b) Case law
16.40
16.41
16.3 The Position of UK Insurers Operating in Europe
16.3.1 Licensing Issues
16.42
16.43
16.3.1.1 Direct insurers
16.44
16.45
16.46
16.3.1.2 Pure reinsurers
16.47
16.48
16.49
16.50
16.51
16.52
16.53
16.3.2 The Effect of Equivalence under Solvency II
16.54
16.55
16.56
16.57
16.3.2.1 Impact on direct insurers
16.58
16.3.2.2 Impact on reinsurers
16.59
16.3.3 Multiple and Overlapping Group Supervision Regimes
16.60
16.61
16.62
16.63
16.64
16.3.3.1 Worldwide group supervision
16.65
16.66
16.67
16.3.3.2 Disapplication of European group supervision
16.68
16.69
16.3.3.3 Choice of method for group solvency
16.70
16.71
16.72
16.3.3.4 Group internal models
16.73
16.74
16.75
16.4 Contract Continuity for Existing Business
16.4.1 How Does Brexit Affect Existing Contracts?
16.76
16.77
16.4.2 European Insurers Operating in the UK
16.78
16.79
16.80
16.81
16.82
16.83
16.84
16.85
16.4.3 UK Insurers Operating in the EU
16.86
16.87
Further Material
Index
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Table of European Legislation
Edited By: Jonathan Herbst, Simon Lovegrove
From:
Brexit and Financial Regulation
Edited By: Jonathan Herbst, Simon Lovegrove
Content type:
Book content
Product:
Financial Law [FBL]
Published in print:
31 January 2020
ISBN:
9780198840794
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