The US regulator, Commodity Futures Trading Commission (CFTC), has allowed UK Firms to gain further relief, affiliates, and swap counterparties included. This extended relief was enacted in order to help with the resolution should any other issue pop up thanks to Britain shunting itself out of the EU without a deal in place.
UK Firms Getting Some More Relief
All the CFTC did through this relief extension, is just extend the exemptions and no-action relief given to various UK and EU institutions as they brace for the no-deal Brexit’s impact.
What this means for UK firms, is that they will be eligible to gain relief, albeit temporarily, from various other regulatory requirements. In particular, this pertains to swap clearing requirements and uncleared swap margin rules. UK firms can now rely on CFTC staff relief through these letters when it comes to a number of issues, such as swap data reporting, broker registration introduction, as well as certain swaps needing better trading and clearing.
Brexit Continues To Chug Along
British firms will, through this up to a year-long temporary relief, can transfer swaps to affiliate firms without the expected subjugation of swap clearing or uncleared swap margin requirements imposed by the CFTC. Alongside this, UK firms will gain access to leverage various agency-authorized trading venues in order to meet their respective obligations to the regulator. This includes obligations pertaining to derivatives trading, as well.
As the UK’s withdrawal from the EU continues to loom, the CFTC has taken various steps in order to help make this transition as smooth as possible. A prime example of this could be seen with the CFTC signing agreements last year with UK authorities. These agreements officiated the mutual recognition of the respective countries’ regulatory frameworks.
Always Have A Plan B
Clark Hutchison stands as the Director of the DCR, and gave comment about the massive implications of the UK leaving the EU. He explained that London stands as a critical part of the derivative markets’ financial system, with the derivatives sector itself being one of the most interconnected in the world. Hutchison explained that the new relief measures would allow the derivatives space to avoid the brunt of disruption the transition period’s end will cause.
As it stands now, the transition deal in place will enable the uninterrupted continuation of various cross-border financial services, but only until 2021’s end. However, this would lead to a problem for US customers trying to access the UK markets, in the unfortunate (but probable) event that the UK leaders fail yet again to has out their divorce settlement. As such, contingencies need to be put in place to try and counteract this.