Almost 6 months have passed since the end of the Brexit “transitional phase”. Since then, the signs that EU and UK regulation will continue to diverge have continued, especially in financial regulation. This article on the Reuters site reports that the UK is urging the EU to reopen talks on cooperation on financial services regulation, following the conclusion of previous talks (see here).

This article on the FT web site looks at the some of the divergences and reports on the acceptance and even appetite for further change. As a result, equivalence from the EU side, for example recognition of UK based Regulated Markets for the purpose of calculating the EMIR clearing threshold, is unlikely to be forthcoming in the near future. The lack of such equivalence increases the chance of an EU based Non Financial Entity exceeding the threshold.

This article on the FT web site highlights the contents of this report published by the UK Government’s Taskforce on Innovation, Growth and Regulatory Reform, which sees opportunities arising from divergence, including in financial regulation. This article on Bloomberg reports on the reluctance by many personnel to move to the EU when organisations attempt to move operations due to possible regulatory requirements. This article on Bloomberg looks at this report published by the New Financial think tank, which finds that while a shift has taken place from the UK to the EU since Brexit, London still remains some way ahead in terms of size and activity at present.

While there are different views on the merits of divergence, the impact is felt on a practical level by market participants. For example, while the changes to EMIR reporting at the EU level are now starting to be examined (see here), a consultation at the UK level will be run this summer (see here). As a result, it remains ever more important to stay informed of developments in each jurisdiction.