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Markets and Securities Services |
International
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other secondary legislation to see quite what
detail is to be proposed for transposing laws as
at the exit date.
The post-Brexit deal will be set out in further
bills in due course. For any post-withdrawal deal,
there will be a separate process from the Great
Repeal Bill process. Any final agreement is to be
voted on by both Houses of Parliament before it
is concluded. Any new treaty to be agreed with
the EU would also be subject to the provisions
of the Constitutional Reform and Governance
Act 2010 before ratification.
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Although we cannot predict the outcome of
negotiations, the relevant issues for asset
managers to debate, and on which to lobby,
include the following:
Equivalence or mutual negotiation?
The ideal outcome of any deal might be a
mutual recognition system, but we would need
to invent an appropriate format for that.
Certainly there are no existing powers that
will help. Despite all the talk of third-country
equivalence regimes, these simply do not exist:
• There is prospectively one available under the
AIFMD, but it is not yet switched on. Despite
ESMA’s Opinion of September 2016, there are
continuing uncertainties as to whether the
AIFMD third-country regime will be switched
on and if so, whether or not it would actually
help.
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Most countries currently operating
under the National Private Placement Regime
(NPPR) will likely prefer to continue using it.
In terms of further legislation, we also know:
• The government estimates that corrections
to the law will require between 800 and 1,000
statutory instruments. This is in addition to
those that will be necessary for purposes
other than leaving the EU.
• Much political debate has focused on
whether this use of secondary legislation is
appropriate. There is meant to be a degree of
discretion to be exercised and the House of
Lords Select Committee on the Constitution
has raised the challenges to mark the
difference between “the more mechanical
act converting EU law into UK law, and the
discretionary process of amending EU law
to implement new policies in areas that
previously lay within EU’s competence”.
• And the government’s response to this
challenge is simply to say that, without
powers for secondary legislation to deal with
this issue, it would “require a prohibitively
large amount of primary legislation to correct
these problems”, which, of course, is not
really an answer to the question. Certainly
though, Secretary of State for Exiting the
European Union David Davis states clearly
in the foreword to the white paper that the
Great Repeal Bill “is not a vehicle for policy
changes – but it will give the government the
necessary power to correct or remove laws
that would otherwise not function properly
once we have left the EU.”
The Great Repeal Bill makes no mention of
financial services or any other particular sector,
so we will need to await the further bills and
The Great Repeal Bill will not aim to make major changes
to policies or establish new legal frameworks in the UK
beyond those which are necessary to ensuring the law
continues to function properly from day 1. Therefore the
government will also introduce a number of further bills
during the course of the next two years to ensure we are
prepared for our withdrawal — and that Parliament has the
fullest possible opportunity to scrutinise this legislation.
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