With the MiFID II deadline now passed, despite continuing developments(see here), many are starting to consider the actual impact of “Brexit”, especially those in the UK or dealing with UK counterparties. There is a great deal of headline level discussion at present about the shape of deals, and other political considerations (for example see this recent article on the Guardian website). At the same time, those in the commodity and energy markets, or indeed the financial markets, will need to consider the very real arrangements to be made, that are likely to kick in to some degree in just over 15 months’ time. The challenge being that it is not currently very clear what those arrangements will be. Here we will look at some recent developments that have occurred since the last such post here.
On the financial markets side, ISDA have recently been actively looking at ways to mitigate the possibility of legal issues if using the ISDA Master agreement under English law. This article by ISDA as featured on The OTC Space introduces the issue and announces that French and Irish versions of the master agreement will be produced, to be available as an option for entities to use. This article on Reuters discusses the issue, as a “back up plan”. This recently updated FAQ from ISDA looks at different related topics in more detail. This article on FT.com looks at the desire by exchanges for regulators to consider the open access rules of MiFID II in the light of Brexit.
On the energy markets side the issue of leaving the internal energy market is discussed in this article on the global risk insights site. This article on edie.net examines the issue of whether the UK should remain part of the internal energy market. It also looks at how the withdrawal impacts the Emissions Trading Scheme, in particular the 4th phase which starts in 2020. The UK government recetnyl closed a consultation on bringing forward the 2018 ETS deadlines in the light of Brexit (see here).
In terms of wider commodity trading, this article by Brian Perrot of Holman Fenwick Willan LLP on Mondaq looks at matters to consider in terms of Brexit.
We can expect the pace of these discussions to now pick up as the deadline draws nearer. As the year goes on, market participants will need answers on questions relating to the rules already implemented and discussed here, i.e. MiFID II, EMIR, REMIT and others. The time available to implement such changes is already short, and needs to be used as best as possible.