Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019

17 Jan 2019 | 3 min read

SI 2019/Draft: This draft enactment is laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This draft enactment proposes to amend UK subordinate legislation in relation to the European Economic Area’s (EEA) ‘financial services passport' which allows firms in EEA states to offer services in any other EEA state on the basis of their home state authorisation and to non-UK central counterparties and trade repositories which provide certain services in the UK under the European Market Infrastructure Regulation in order to address deficiencies in retained EU law. Without this instrument, where these firms do not enter the UK’s temporary regimes, they may not be able to meet existing contractual obligations or provide services. This could be detrimental to UK-based customers and could lead to disruption of services.

Purpose

These draft Regulations are laid in exercise of the powers in section 8(1) of, paragraph 1 of Schedule 4 to, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018 (EU(W)A 2018).

These draft Regulations are laid to:

• amend subordinate legislation to provide further transitional provision in respect of the performance of contracts entered into before exit day

• amend the EEA Passport Rights (Amendment, etc, and Transitional Provisions) (EU Exit) Regulations 2018, SI 2018/1149, to provide a regime to continue to perform a regulated activity in certain circumstances, miscellaneous transitional provision in respect of other areas of financial services legislation, and a power for the Treasury to amend certain time limits set

• amend the Central Counterparties (Amendment, etc, and Transitional Provision) (EU Exit) Regulations 2018, SI 2018/1184, to provide for a run-off regime for central counterparties which do not enter the temporary recognition regime or who cease to be part of that regime where they have not gained permanent recognition

• amend the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018, SI 2018/1201, to provide for a run-off regime for EEA authorised electronic money institutions, EEA authorised payment institutions, and EEA registered account information service providers which cease to be part of the temporary authorisation regime where they have not gained permanent authorisation

• amend the Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018, SI 2018/1318, to provide for a run-off regime for trade repositories which cease to be part of the temporary registration regime where they have not gained permanent registration

Resolution procedure

• Affirmative

Amended UK enactments

• EEA Passport Rights (Amendment, etc, and Transitional Provisions) (EU Exit) Regulations 2018, SI 2018/1149

• Central Counterparties (Amendment, etc, and Transitional Provision) (EU Exit) Regulations 2018, SI 2018/1184

• Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018, SI 2018/1201

• Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018, SI 2018/1318

Amended EU enactments

• None

Repeals and revocations (whole/partial)

• None

Savings and transitional provisions

• transitional and saving provisions are laid in Chapters 1 and 2 of Part 2 of these draft Regulations, where there is limited permission to carry on a regulated activity and there is exemption from the general prohibition among other things

• further transitional provisions relating to electronic money and payment services are laid on Part 4 of these draft Regulations

Jurisdictional extent

This draft enactment extends to England, Scotland, Wales and Northern Ireland.

The full draft legislation and explanatory memorandum can be found here.

Note on retained EU law: unless otherwise stated, references to EU enactments in this summary are references to direct EU legislation anticipated to form part of the body of retained EU law incorporated into UK domestic law (as amended) on exit day under EU(W)A 2018.

Area of Interest