As the political side of the “brexit” process continues to twist and turn (see for example here on Sky News), there have been more developments affecting those in energy and commodities since our last update here. Many of these focus on preparations to be made for the increasing possibility of a “hard Brexit”.
On Wednesday, the European Commission issued a “Contingency Action Plan” outlining 14 measures taken to mitigate a “hard Brexit” (see here for the press release). The plan, which can be found here, includes a temporary recognition of UK based CCPs for a year, so that EU Investment Firms may continue to use them. However, Regulated Markets have not been recognised, despite a request to the Commission from different industry associations for them to do so, which can be found here. This could have an adverse impact on EU based Non Financial Counterparties with positions on UK exchanges , increasing the risk of their become an “NFC+” under EMIR.
A temporary removal of the clearing obligation on certain institutions in order to facilitate novation in also included in the plan. A different part confirms that in the event of a hard Brexit, the UK will not receive the annual allocation of EUA permits as part of the ETS. A Q+A related to the plan can be found here.
In the meantime, the European Commission is set to extend equivalence for Swiss trading venues for the first 6 months of 2019. The press release can be found here.
The Brexit story will no doubt continue to evolve over the holiday period. There are now less than 100 days left until the Brexit date.