How will the replacement EU regulations take shape?
Well, unless a completely new framework is to be designed and implemented to ensure continued the “regulation, functioning, and transparency” of the UK’s financial, commodity and energy markets, then EU Regulations will have to be adapted to fit the UK only legislative framework.
In practice, it is unlikely that any changes will result in a relaxation of rules for UK market participants. Rather, changes will result in greater responsibilities being placed on the domestic market regulators including the Financial Conduct Authority and Ofgem.
Negotiating this new market regulatory environment will consist of three parts – the political lead (which we are still waiting for), the strategy of regulators, and the optimisation and tactical positioning by businesses and trading organisations.
- POLITICAL – the UK, the EU and member states need to clearly re-state their collective support of the G20 commitments and agreements.
- REGULATION – Regulators to look carefully at what needs to change, and to provide confidence in the continuity and integrity of an effective regulatory framework. UK regulators would be well advised to help protect investments made in systems, processes and resources to meet current EU regulations. Both the UK and the EU have a common interest to make clear how the potential for “regulatory arbitrage” will be avoided.
- BUSINESS & COMMERCIAL – EU regulations will continue to apply until 2019. So companies will need to continue to comply. Steps however, should – and can, be taken to prepare. including; engaging with the re-drafting process, build in operational flexibility for reporting, and consider the impact of EU exit on business supply chains, customers and activities.