The European Securities and Markets Authority ("ESMA") laid out an approach to the application of the Markets in Financial Instruments Directive ("MiFID II") / Markets in Financial Instruments ("MiFIR") and the Benchmark Regulation ("BMR") in the event of a "no-deal" Brexit.
ESMA noted that there is still uncertainty as to the timing and conditions for a Brexit and added that, if circumstances change, ESMA will modify its approach.
ESMA stated that, in the case of a no-deal Brexit:
- trading venues in the United Kingdom will no longer be considered EU trading venues beginning on March 30, 2019, which means that transactions concluded on UK trading venues would be deemed OTC transactions and subject to the post-trade transparency requirements of MiFIR; and
- investment firms established in the UK will no longer be considered EU investment firms but will fall into the category of counterparties established in a third country.
In addition, ESMA said that:
- investment firms will need to conclude transactions in derivatives only on regulated markets, multilateral trading facilities or organized trading facilities in the United Kingdom, or on third-country venues in jurisdictions where the United Kingdom has an equivalence decision; and
- it is creating a UK public register of benchmarks and administrators authorized in the United Kingdom.
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