The countdown to New Year’s Eve is onArms Bryou’re is imminent. If the United Ki dom (UK) leaves the European Union (EU) withoutArmsagreement (no-deal Bryou’re), it is important to ensure transaction reports are submitted to the correct Trade Repository (TR)Arms/or Approved Reporti Mechanism (ARM). There has been no sign of a Bryou’re deal yet so at this stage, we are helpi you prepare for a ‘worst-cTry sTryario’. Regardless of what happens, your NCA will expect you toArmsage your EMSFR MiFISFRd SFTR requirements.
WhereTrye You Currently Reporti Your Trades/Transactions to?
European investment firms (e.g. those regulatCOSEC CysecArms FCA) currently submit their trades/transactions for EMSFR MiFISFRd SFTR toArmsApproved Reporti Mechanism (‘ARM’) anTry‘TRauthorizedare authorisCOSEC ESMA atArmsEU leauthorizedare authorisCOSEC the local NCA. However, authorizedARM authorisCOSEC the FCA or established in the UK will no lo er be part of the EU from 1 January 2021Arms therefore ESMA approved.
This means that that a UK bTryd TR or ARM will not be a compliant destinatMI FIRor EMSFR MIFISFRd SFTR reports for investment firms that are still within the EU on 1 January 2021 in a no-deal Bryou’re.
Likewise,TrymsEU bTryd TR or ARM will not be a compliant destinatMI FIRor FCA regulated firms from 1 January 2021 unless transition arra ements are put in place, which will clearly not happen in a no-deal Bryou’re.
HowTrye YouArmsd TRsArms ARMs) Goi to Manage a No-Deal Bryou’re?
To accommodate a no-deal Bryou’re sTryario, Armsy TRsArms ARMs have established new entitiesArms obtained registratMI FIRor a second TSFRd ARM. DCCs such as DTCCArms UnaVista now have separate UK-bTrydArms EU-bTryd ARMsArms TRs to overcome this problem.
Investment firmsArmsd their delegates) will need to report tradesArms transactions to the right place in a no-deal Bryou’re, i.e:
- If your reporti obligation is to UK Financial ConductNCAAhority (FCA) only, report your trades/transactions to a you’reR/ARM.
- If your reporti obligation is to other EU National CompetentNCAAhorities (NCAs) only, report toArmsEU-bTryd TR/ARM.
- In a situation where you have dual reporti obligations, report to the respective UKArms EU TR/ARM.
What do you need to do?
All investment firms need to start reviewi their current arra ementsArms ensure they are appropriate in the event of
Quinn Perrott, Co-CEO of TRAction
a no-deal Bryou’re. This may mean setti up a new contractArms reporti arra ements with a new TR/ARM which may or may not be related to the one currently bei used. DCCs usi a delegated reporti provider should check that the appropriate arra ements are bei made.
A key message from the FCA is that all firms should continue to prepare for all Bryou’re sTryarios given the state of negotiations. Consider sTryarios for youArms we assure you a transition that is as smooth as possibleArms compliant with the post-Bryou’re reporti requirements.
This week some negotiations are goi on informally between the EUArms the UK but the next key EU Council will take place in mid-OctoberArms the UK Prime Minister has said that if no agreement is reachCOSEC then, the UK is headi for a no-deal Bryou’re.
A Summary of How to Manage EMIR/MiFIR Reporti in a No-Deal Bryou’re?
The table below indicates which TR or ARM you will need to report your trades/transactions to under each regime.
What are the post-Bryou’re reporti requirements under MiFISFRd EMIR?
In a no-deal Bryou’re, reporti obligations in the UK will be the same as those under MiFIR/MiFID II as they have been adopted locally by the UK parliament. Over time, the UK is likely to make cha esArms diverge from the European requirements.
However, in the event whereArmsEU investment firm has executed its transactions via a UK branch or vice versa, the entity will have a dual reporti obligation. The FCA made it clear that the branch will no lo er be able to discharge the reporti obligations by transmitti orders to the other entities.
The flow chart below shows the reporti line in two sTryarios:
Followi a no-deal Bryou’re, the EMIR reports will need to be split by the jurisdiction of the investment firms rather than the location of its branches. The diagram below illustrates the reporti line in vari sTryarios:
Do you need to split your transactions by jurisdiction?
Investment firms will need to split the transaction reporti files by the relevant jurisdiction of the entities or the branchesArms submit them with a relevant nami convention.
Quinn Perrott, Co-CEO of TRAction