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HMT policy paper – equivalence decisions announced for EEA States

HMT policy paper – equivalence decisions announced for EEA States

 

Background

  • On 9 November, HM Treasury (HMT) published a policy paper (“HM Treasury equivalence decisions for the EEA States”)
  • Using its powers, HM Treasury is granting a package of equivalence decisions to the EEA States:
    • Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 (S.I. 2019/541) provides powers for HM Treasury to make equivalence directions and exemption directions for the EU and EEA member states
    • The Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184) provides powers for HM Treasury to make equivalence determinations for central counterparties (‘CCPs’)
  • The full policy paper document provides detail on these equivalence decisions: https://www.gov.uk/government/publications/hm-treasury-equivalence-decisions-for-the-eea-states-9-november-2020/hm-treasury-equivalence-decisions-for-the-eea-states-9-november-2020

Impacts

To provide clarity and stability to industry and reflecting the Government’s commitment to be as open as possible, HM Treasury announced as many decisions as possible in advance of the end of the Transition Period provided for under the agreement on the UK’s withdrawal from the EU (the Transition Period) on 31 December 2020.

Granting these equivalence decisions provides a range of benefits, including supporting well-regulated open markets, facilitating effective pooling and management of risk, and supporting UK and EEA clients’ access to financial services and market liquidity.

These decisions were laid before Parliament on 10 November 2020. The UK Government confirmed that it is not ruling out further equivalence decisions for the EEA States in the future as it continues to believe that comprehensive mutual findings of equivalence between the UK and the EEA States are in the best interests of both parties; however, the UK awaits clarity from the EU about its intentions.

Timeline with relevant dates to be logged on regulatory calendar

  • The new decisions will come into force on IP completion day as defined in the European Union (Withdrawal Agreement) Act 2020 (that is, 31 December 2020 at 11pm). The impact therefore applies from 1 January 2021.

Next steps

All firms need to note these decisions and the possibility of further imminent changes.

If anyone has specific questions or needs any advice, contact our specialists.