The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2020

The Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019

11.—(1) The Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019(1) are amended as follows.

(2) In regulation 1 (citation, commencement and interpretation)—

(a) in paragraph (4)—

(i) before sub-paragraph (a), insert—

“(za) “CSD” means a legal person that operates a securities settlement system referred to in point (3) of Section A of the Annex of the CSDR and provides at least one other core service listed in Section A of the Annex;

(zb) “CSDR” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012;”;

(ii) after sub-paragraph (h), insert—

“(ha) “MiFIR” means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012;”;

(b) for paragraph (5) substitute—

“(5)  Any reference in these Regulations to a specific EU Regulation or EU Decision, or part of an EU Regulation or EU Decision, is to that EU Regulation or EU Decision, or that part of the EU Regulation or EU Decision, as it forms part of retained EU law on IP completion day.”.

(3) In regulation 2 (equivalence directions)—

(a) after paragraph (1), insert—

“(1A) For the purposes of making determinations under paragraph (1), the Treasury may consider (among other things)—

(a) sanctions, embargos or similar measures issued by, for example, the European Union or the United Nations; and

(b) whether the relevant EEA state is a “high-risk third country” within the meaning of regulation 33(3) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017(2).

(1B) Directions under paragraph (1) may contain such conditions for or limitations on the applicability of an equivalence direction as the Treasury considers appropriate.”;

(b) in paragraph (2)(a), for “exit day” substitute “IP completion day”;

(c) in paragraph (5), for “the end of the period of twelve months beginning with exit day” substitute “IP completion day”.

(4) In regulation 3 (exemption directions)—

(a) in paragraph (2)(a), for “exit day” substitute “IP completion day”;

(b) in paragraph (5), for “the end of the period of twelve months beginning with exit day” substitute “IP completion day”.

(5) In Schedule 1—

(a) in paragraph 2(a), for “Article 107(3)” substitute “Articles 107(3) and 391”;

(b) after paragraph 3, insert—

“Central Securities Depositories Regulation

3A.— (1) For the purposes of Article 25(9) of CSDR, to determine that an EEA state has legal and supervisory arrangements which ensure that—

(a) CSDs authorised in that EEA state comply with legally binding requirements which are in effect equivalent to the requirements laid down in CSDR,

(b) CSDs authorised in that EEA state are subject to effective supervision, oversight and enforcement in that EEA state on an ongoing basis, and

(c) the legal framework of that EEA state provides for an effective equivalent system for the recognition of CSDs authorised under the legal regimes of other states.

(2) For the purposes of paragraph (1), the Treasury may also consider whether the legal and supervisory arrangements of that EEA state reflect the internationally agreed CPSS-IOSCO standards, in so far as the latter do not conflict with the requirements laid down in domestic legislation including CSDR.”;

(c) after paragraph 4, insert—

“4A.— (1) For the purposes of Article 75(1) of EMIR, to determine that the legal and supervisory arrangements of an EEA state ensure that—

(a) trade repositories authorised in that EEA state comply with legally binding requirements which are equivalent to those laid down in EMIR including, where relevant, compliance with the requirements to give direct and immediate access to the data held by the trade repository to the entities referred to in Article 81(3) of EMIR,

(b) effective supervision and enforcement of trade repositories takes place in that EEA state on an ongoing basis, and

(c) guarantees of professional secrecy exist, including the protection of business secrets shared with third parties by the authorities, and that they are at least equivalent to those set out in EMIR.

(2) Directions under regulation 2(1) must also specify the relevant authorities in that EEA state that are entitled to access data held by trade repositories established in the United Kingdom.

4B.   For the purposes of Article 76a of EMIR, and upon the submission of a request by the relevant authorities of an EEA state, the Treasury may determine whether the legal framework of an EEA state of the requesting authority fulfils all of the following conditions—

(a) trade repositories established in that EEA state are duly authorised,

(b) effective supervision and enforcement of trade repositories takes place in that EEA state on an ongoing basis,

(c) guarantees of professional secrecy exist, including the protection of business secrets shared with third parties by the authorities, and they are at least equivalent to those set out in EMIR, and

(d) trade repositories authorised in that EEA state are subject to a legally binding and enforceable obligation to grant the entities referred to in Article 81(3) of EMIR direct and immediate access to the data.”.

(d) in paragraph 5(1), for “Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (“MiFIR”)” substitute “MiFIR”;

(e) for paragraph 8, substitute—

“8.— (1) For the purpose of Article 47(1) of MiFIR, to determine that the legal and supervisory arrangements of an EEA state ensure that firms authorised in that EEA state comply with legally binding prudential and business conduct requirements which have equivalent effect to the requirements set out in MiFIR, in the law of the United Kingdom which was relied on by the United Kingdom immediately before IP completion day to implement Directive 2013/36/EU(3) and Directive 2014/65/EU(4), and in the implementing measures adopted under MiFIR and under those Directives and that the legal framework of that EEA state provides for an effective equivalent system for the recognition of investment firms authorised under third-country legal regimes.

(2) In sub-paragraph (1), the prudential and business conduct framework of an EEA state may be considered to have equivalent effect where that framework fulfils all the following conditions—

(a) firms providing investment services and activities in that state are subject to authorisation and to effective supervision and enforcement on an ongoing basis,

(b) firms providing investment services and activities in that state are subject to sufficient capital requirements and appropriate requirements applicable to shareholders and members of their management body,

(c) firms providing investment services and activities are subject to adequate organisational requirements in the area of internal control functions,

(d) firms providing investment services and activities are subject to appropriate conduct of business rules, and

(e) it ensures market transparency and integrity by preventing market abuse in the form of insider dealing and market manipulation.”.

(f) in the following provisions, for “exit day”, in each place it occurs, substitute “IP completion day”—

(i) paragraph 4(1)(a);

(ii) paragraph 5(1);

(iii) paragraph 5(2);

(iv) paragraph 9(7);

(v) paragraph 12(5)(b).

(1)

S.I. 2019/541.

(2)

S.I. 2017/692.

(3)

OJ No. L 176, 27.6.2013, p. 338.

(4)

OJ No. L 173, 12.6.2014, p. 349.