The monitoring of firms' contingency planning conducted by supervisory and resolution authorities shows that financial institutions need to speed up their preparations for the potential departure of the UK from the EU in March 2019 without a ratified Withdrawal Agreement in place. While the political agreement on a transition period is welcome, it will not be given legal effect until there is a ratified Withdrawal Agreement in place. This is not guaranteed, and in any event, it will only come at the end of the Article 50 process.
In a bid to ensure that firms are fully prepared for all scenarios the EBA has shared its views on its expectations in the opinion.
Based on the EBA's assessment, financial institutions should take adequate steps to mitigate the impact without relying on possible public sector solutions that may not be proposed and/or agreed in time. In particular, financial institutions should ensure they have the correct regulatory permissions, and associated management capacity in place ahead of time.
They should identify risks around access to financial market infrastructures and funding markets and mitigate those. Financial institutions should also assess and take necessary actions to address any impacts on rights and obligations of their existing contracts, in particular derivative contracts.
Financial institutions also have a duty to communicate clearly to their customers where the latter might be impacted by the departure of the UK without a ratified Withdrawal Agreement. Financial institutions should inform their Competent Authorities about the actions they are taking, including with respect to communication with their customers.
TheCityUK responds to EBA and ECB on firms’ Brexit contingency plans
Hover over the blue highlighted
text to view the acronym meaning
over these icons for more information
No Comments for this Article