Hard Brexit Impact Analysis

Page 42 of 106 Category If no agreement is reached: Consequence EU Document Finance post trade services DERIVATIVES: As of the withdrawal date , derivatives traded on a UK regulated market will no longer fulfil the definition of exchange traded derivatives (ETDs) under EU law. According to Article 2(32) of MIFIR, ETDs are derivatives traded on an EU regulated market, or on a third- country market considered to be equivalent. Thus, under EU law, as of the withdrawal date, ETDs traded on a UK regulated market will be over- the-counter (OTC) derivative contracts. WITHDRAWAL OF THE UNITED KINGDOM AND EU RULES IN THE FIELD OF POST-TRADE FINANCIAL SERVICES Finance post trade services DERIVATIVES: As of the withdrawal date, An ETD that becomes an OTC derivative will thus become subject to all EMIR requirements applicable to OTC derivatives transactions: all OTC derivatives transactions count towards the calculation of the clearing threshold in accordance with the provisions of EMIR11, and will be subject to the EMIR clearing obligation where one has been adopted as well as certain risk mitigation techniques (notably the exchange of margins). WITHDRAWAL OF THE UNITED KINGDOM AND EU RULES IN THE FIELD OF POST-TRADE FINANCIAL SERVICES Finance post trade services DERIVATIVES: As of the withdrawal date CCPs established in the United Kingdom will be third-country CCPs which would need to be recognised under EMIR before they could be used to fulfil the clearing obligation. Counterparties will not be able to fulfil their clearing obligation under EMIR in CCPs established in the United Kingdom as long as those CCPs are not recognised by ESMA under EMIR. WITHDRAWAL OF THE UNITED KINGDOM AND EU RULES IN THE FIELD OF POST-TRADE FINANCIAL SERVICES Finance post trade services DERIVATIVES: As of the withdrawal date The obligation to clear transactions through an authorised CCP established in the EU or a recognised CCP established in a third country also applies to counterparties established in third countries, where the contract has a direct, substantial and foreseeable effect within the EU or where such an obligation is necessary or appropriate to prevent the evasion of any provisions of EMIR. WITHDRAWAL OF THE UNITED KINGDOM AND EU RULES IN THE FIELD OF POST-TRADE FINANCIAL SERVICES