The UK Has Left the EU – What Happens Now?

Now that the UK has left the block, will there be changes to EMIR and MiFIR reporting?

The time is finally here – the United Kingdom has officially left the European Union. Investment firms and brokerages have been waiting in anticipation for there to be some clarity regarding Brexit, so now the time has come, what does this mean for firms operating in either of these regions in terms of regulation? 

Following the UK’s withdrawal from the bloc on January 31, 2020, the region is now in an 11-month transition period, beginning on February 1 and ending at the end of this year on December 31. This means that, unfortunately, firms are going to have to wait almost another year until they get an answer.

Do brokers need to change their EMIR and MiFIR reporting?

So do brokers need to make any changes to their current European Market Infrastructure Regulation (EMIR) and Markets in Financial Instruments Regulation (MiFIR) reporting? The short answer is not yet.

quinn perrott of tRAction
Quinn Perrott, Co-CEO of TRAction

Speaking to Finance Magnates, Quinn Perrott, the Co-CEO of TRAction Fintech said: “According to the terms of the Withdrawal Agreement, the EU law continues to apply in the UK during the transition period and hence there is no change to the current reporting obligations until at least the end of the transition period (i.e., December 31, 2020).  For now, no actions are required from investment firms.”

What happens if a no-deal Brexit occurs?

Although a transition period has been put in place, there is still a risk that the UK might not reach an agreement with the EU by January 1, 2021, which is referred to as a hard Brexit. 

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However, regardless of whether a deal is struck, Perrott highlighted that Britain would leave all the institutions and structures of the EU, such as EU judicial structures, including the European court of justice, EU security and defense arrangements, and agreements such as data sharing.

The transition period allows the UK to further negotiate with the EU to secure a deal; nonetheless, at this point, it remains unclear if a deal will be reached and what it might look like.

Therefore, when it comes to the question – what will be the impact on EMIR and MiFIR Reporting – at this stage, no one knows, and financial firms must yet again take a wait-and-see approach.

“In either case, we anticipate that clients domiciled in the EU will need to report to EU-based (as it will then be constituted) TRs and ARMs. Investment Managers and firms in the UK will need to continue to submit reports in the current format, but likely to UK-based TRs and ARMs, until such a time any changes are made by the FCA to EMIR and MiFIR to create a divergence from the current EU directives and regulations,” added Perrott.

Although the UK has officially left the bloc after more than three years since the vote took place on June 23, 2016, clarity still remains out of reach.

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