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Brexit, SFTR

SFTR for NFCs cancelled in UK – and other Brexit divergences

On Tuesday 23rd June Rishi Sunak, the UK’s Chancellor of the Exchequer, issued this statement providing updates on how Financial Services regulations will be applied in the UK once the Brexit transitional period ends on 31 December 2020. Contained within it is an announcement that the UK will not be applying the Securities Financing Transaction Reporting regulation (SFTR) to Non Financial Counterparties (NFC). The relevant text is towards the bottom of the page and also contains some information on the application of MAR and EMIR.

Reporting was due to start for NFCs during January 2021 and still will  do so for those in the EU. This post from January 2020 summarises the final status. The FCA has also updated their SFTR page here. According the the final guidance, SFTR will impact a proportion of energy and commodity market participants, who will have transactions that are deemed “commodities lending”. While some transactions were excluded in the final guidance from ESMA, due to their being for “operational purposes” the requested  “REMIT carve out” was not granted. Those in the EU will still need to prepare to comply with this regulation.

This is a divergence by the UK from EU rules, which many in the UK will welcome. It will be interesting to see if further divergences occur and how they are handled, especially by groups with entities in the UK and the EU.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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