The political side of Brexit has seen plenty of news over the last two weeks, and this is set to continue, with another vote in the UK Parliament tomorrow (see here on the BBC web site for example). Since our last post here, there have also been some regulatory developments on the financial,energy and commodity sides of things:

S&P Global Platts have updated their page that looks at the possible impact of Brexit on different commodities, which can be found here. It looks across several commodities, including gas and power, where the issue of inter connectors is mentioned, as well as emissions, oil, coal, metals and agriculture. Each commodity has different considerations, with some causing more concern than others.

In the meantime, the London Metals Exchange, amongst others, has updated their web site Brexit section (here). It includes a “Brexit FAQ” (here) which covers many topics, including the fact that Regulated Markets may not be deemed “equivalent” after a “hard Brexit”. This has an impact on calculations such as the EMIR clearing threshold. Conversely, UK CCP access will be permitted to EU entities for a temporary period, as reported here in Reuters. This article by Clyde and Co LLP  on the Lexology web site looks at some other regulatory impacts of Brexit.

Certain elements of the financial infrastructure will move, or at least be replicated,  to the EU 27 after Brexit. This article on the Finance Magnates web site reports that the Bloomberg APA and ARM (used for MiFID II reporting) has obtained a licence in the Netherlands. This article on the Irish Times web site reports that Marex Spectron will move their official headquarters to Dublin, having acquired an Irish company. The move of trading venues that have “Organised Trading Facility” status into the EU 27 has an impact on the potential status of physical forward trades.  ISDA has published this Brexit FAQ that focuses on issues around contractual uncertainty and events. The issue has been picked up by some UK politicians. For example, this article on the City AM web site reports that Bob Neill MP has expressed such concerns.

The Green Alliance has issued this report on the role that inter connectors have to play in ensuring the UK’s security of supply, especially in the light of the cancellation of a nuclear project last week (see here on the Sky News web site for example). It claims that the impact of a “hard Brexit” could be as much as 2.2 bn GBP per annum in the worst case scenario, where the UK neither remains in the Internal Energy Market, nor has appropriate agreements with the EU. However, this article on the Energy voice web site reports that the backers of the 1.5bn GBP “North Connect” inter connector from Norway to Scotland do not see these downsides as a reason to halt the project.

While  the debates continue, the clock counts down with just over 2 months to go until the Brexit date, 29th March 2019 at 11pm. Until we hear otherwise, it is necessary to assume that a “no deal” Brexit will occur and to plan accordingly.