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12 March 2019

149th Brussels for Breakfast – CPD Notes

Organised by the Centre for the Study of Financial Innovation (CSFI), hosted by Chartered Institute of Securities and Investment (CISI) and with co-presenters Denis McShane (Avisa Partners) and Andrew Henderson (Eversheds Sutherland).

This blog covers the key subjects since our last meeting that I hoped to cover but, as always, we ran out of time to deal with them all. As a Friend, you can watch the 40th `structured’ CPD web-cast with CISI. These Notes may be read to record a further 30 minutes of `structured CPD’, including a dipping into the links to the underlying stories.

Highlights from the “Brussels for Breakfast” meeting

History is probably being made today as there is not much road left for the Prime Minister to kick the can down. So debate turned to the scope for delaying Brexit – assuming the other 27 all agree and President Macron (amongst others) has suggested there needs to be a good reason. The EU 27 seems to have a settled opinion that if the UK is a member of the EU when the European Parliament elections are held on May 23-26, then the UK must also hold elections. However, UK commentators seem to wilfully ignore this view. So we debated the possibilities of a technical delay up to say mid-May versus anything longer – and especially up to 2021 (being the end of the transition phase).

The EP elections are very important to financial services as the Parliament is a co-legislator in our field. Assuming Brexit, the number of MEPs will fall to 705. On current projections from Parliament’s own services, the EPP will fall to 174 seats and S&D to 135 so around 50 seats short of a majority. ALDE is currently projected to hold 68 seats – so a three-way grand collation would hold the majority. But the Greens current projection of 45 seats would not provide a majority. Eurosceptic parties could win 250 seats – well short of a majority even in the very unlikely event that they could agree to co-operate.

All this has a bearing on the election of the Commission President, which is then linked to the choice of ECB President. Could Angela Merkel go for the Commission – leaving a Frenchman for the ECB? Or could Barnier go for the Commission Presidency – leaving space for a German at the ECB? Or might a Finn fly in as the outsider?

More prosaically, we discussed the technical steps of short term fixes being adopted by the regulatory community to guard against market disruptions in a no-deal scenario. But the Bank of England’s appeal for it to be trusted on CCPs may lack bite if the UK Parliament cannot be trusted to vote the funds for any costs. The Romanian Presidency has struck very lucky with a rash of dossiers wrapped up before the EP breaks. However, GDPR suddenly jumped out and seized attention as we realised the magnitude to the problem of equivalence – running far beyond finance. The EU’s data supremo has even suggested that the EU would need to know all about the activities of the UK’s spying agencies to grant equivalence.

© Graham Bishop

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