ESMA: EU law will still apply to UK firms during Brexit transition period

Maria Nikolova

By virtue of the withdrawal agreement, EU law will continue to apply to the UK, as if it were a Member State, during the transition period from February 1, 2020 to December 31, 2020.

The European Securities and Markets Authority (ESMA) today published a statement clarifying issues related to the reporting obligations for UK entities following Brexit, which is set to happen at 11pm today.

The terms of the Withdrawal Agreement (WA) stipulate that UK representatives will no longer be permitted to participate in the EU institutions, agencies, or other bodies, and their governance structures, except where exceptionally justified, under the conditions set out in Article 128(5) of the WA. From February 1, 2020, the UK Financial Conduct Authority (FCA) will no longer be a member of ESMA’s Board of Supervisors or participate in any of ESMA’s other governance bodies.

Under the terms of the withdrawal agreement, EU law will continue to apply to the UK, as if it were a Member State, during the transition period from February 1, 2020 to December 31, 2020. This means, inter alia, that rights and obligations for UK entities under EU law will also continue to apply – such as reporting and notification obligations under MiFIDII/MiFIR, EMIR, CSDR, AIFMD, MMFR.

ESMA will continue to directly supervise registered Credit Rating Agencies, Trade Repositories and Securitisation Repositories established in the UK during this period.

ESMA’s statement is in tune with the announcement issued by the FCA on January 30, 2020. The UK regulator noted that firms and funds will continue to benefit from passporting between the UK and EEA. Consumer rights and protections derived from EU law will also remain in place.

In the coming eleven months, ESMA will continue monitoring the application of EU law to/in the UK and will closely monitor developments in preparation for the end of the transition period.

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