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.