Following the success of the Covid-19 Impact webinar series, UK Finance has launched a new webinar series Next Steps for Financial Services. For the Capital Markets and Wholesale team and our members, the webinar series presented an opportunity to look at the progress on the UK-EU trade negotiations and their likely impact on financial services. Accordingly, UK Finance recently held a webinar on this topic with support from Clifford Chance.  

The webinar explored several areas with respect to the UK-EU negotiations and financial services, for example:

• how service provisions are addressed within free trade agreements (FTAs) and why FTAs historically have limited service provisions compared to what is offered within the single market
• why an FTA will differ materially to the provision of cross-border services available under the passporting regime. The passporting regime enables financial services to be supplied within the EU between member states without additional authorisation, whereas the likely outcome of the FTA means third-country firms, intending to provide services into and within the EU, would face additional authorisation and commercial presence requirements in the jurisdiction of business.
• the role regulatory and supervisory co-operation plays in the relationship between the UK and the EU. Establishing and investing in a Joint Financial Services Committee and cooperative relationships could support greater trust on policymaking while respecting both the UK and the EU's freedom to regulate and the autonomy of their respective legal and regulatory regimes.

The webinar made clear that, irrespective of the outcome for the EU and UK's FTA negotiations, the ability to provide services from the UK into the EU will be much more challenging from January 2021. In that context, the provision of cross-border services will be dependent on a mixture of partially mitigating solutions. This includes the UK's overseas persons exemption (OPE), the national licensing regimes of EU member states, as well as authorisations that firms have been seeking from EU regulators (to grant the necessary licenses to an EU based entity).

During the Q&A, there was interest in the chancellor's written statement on financial services published on 23 June. This statement included the government's legislative and regulatory intentions for financial services. As a key update, the chancellor revealed that the reporting obligation of the EU's Securities Financing Transactions Regulation (SFTR) for non-financial counterparties (NFCs) would not be incorporated into UK law. Panellists discussed the notion that because equivalence determinations should be outcome orientated, these announcements should not have an immediate impact on the EU's equivalence decisions. However, the EU will be watching the evolution of the UK's rulebook closely and is likely to take all financial services-related announcements into consideration ahead of any final decisions with respect to equivalence. It is worth noting that whilst the assessments were due to be completed by the end of June, neither the UK nor the EU are expected to declare their respective equivalence determinations until later this year.

The issues surrounding the UK's departure from the EU remain a key focus for UK Finance as we approach the end of the transition period and enter a new regime from 2021. To support our members, we continue to produce collateral to help the industry navigate the legal and regulatory landscape underpinning financial services. Our latest briefing on MiFIR equivalence can be found here.

If you are interested in attending future UK Finance webinars, please see a list of upcoming dates and details of how to sign up here. Additionally, if you would like to know more information on the work of UK Finance and our members, please reach out to Rebecca Simons.