Financial Services Update – Q1 2021

Financial Services Update – Q1 2021

As part of our sector-focused series, we have curated the key resources and points you need to know from the legal updates produced during the last quarter of 2020/ first quarter of 2021. Understand the key news stories, practice notes, timelines and upcoming webinars specific to the Financial Services sector. 

The end of the Brexit transition period

At 11pm GMT on 31 January 2020, the UK ceased to be a member of the EU and a transition period came into effect. For the duration of the transition period, EU law continued to apply to the UK and the UK continued to be treated as if it were still an EU member state. While this had delayed the effect of Brexit, the transition period came to an end at 11pm on 31 December 2020 (IP completion day) and the UK became a third country under EU law. At the end of the transition period, a body of retained EU law was created in the UK as a snapshot of EU law that applied in the UK prior to that date.  For further commentary on what this means for financial services, Jonathan Herbst, global head of financial services, Simon Lovegrove, global director of financial services knowledge, innovation and product, and Matthew Gregory, senior associate, all of Norton Rose Fulbright LLP took a closer look at the financial services aspects of the EU-UK Trade and Cooperation Agreement. Read More...

Brexit ‘how to’ guide—your research queries answered

Public Law analysis: We have collated your frequently asked questions on Brexit-related research into a quick reference Brexit ‘how to’ guide.

Questions covered in the guide include:

• how do I find the latest Brexit updates?

• how do I find information on the impact of the end of Brexit transition period?

• how do I find out if a piece of legislation is impacted by Brexit?

• how do I know if a piece of EU legislation is retained in UK law?

• how do I get in touch if I cannot find or access what I am looking for?

Read More...

Comment—Relieved? UK and EU agree post-Brexit deal

Public Law analysis: On 24 December 2020, after roller-coaster negotiations, the UK and the EU announced they had agreed a post-Brexit ‘EU-UK Trade and Cooperation’ Agreement. The EU-UK Agreement provides for zero tariffs and quotas. It represents a fundamental shift in the EU-UK relationship with substantially reduced market access but greater UK autonomy. Phillip Souta, head of UK Public Policy at Clifford Chance examines what it covers, what it doesn’t, and what happens next.

Read More...

Consultation on LIBOR cessation – what is the impact on transition timing?

Banking and Finance analysis: This News Analysis looks at the implications of ICE Benchmark Administration’s (IBA’s) consultation on potential cessation of LIBOR, published in December 2020.

Read More...

Brexit focus - commercial and practical help

The Brexit transition period came to an end at 11pm on 31 December 2020, marking IP completion day in the UK. The immediate impact and ongoing complications bring up a significant number of issues, and so, we have a number of resources giving you the need-to-know information:

1. Brexit toolkit

Our Brexit toolkit draws together Brexit content for the practice areas that are relevant for you.

Brexit toolkit

2. Brexit - Statutory Instruments (SI) tracker

This tracker lists all Brexit-related financial services statutory instruments (SIs), together with explanatory memoranda and other information for each SI, as well as links to primary sources.

Brexit—Financial Services—Statutory Instruments (SI) tracker.

3. The impact of IP completion day

The following Practice Note provides a summary of the Brexit content in LexisPSL Financial Services to help navigate Brexit:

Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime

LIBOR focus – commercial and practical help

LIBOR remains a key focus for many in-house financial services lawyers. We share content from our colleagues in LexisPSL Banking & Finance. The following Practice Notes and tracker will help you to keep up to date with the development of alternative RFRs and plan for a smooth transition away from LIBOR.

LIBOR transition—glossary and quick reference guide - aims to assist with understanding the LIBOR transition terminology, putting it in context, and finding more detailed information quickly and easily.

LIBOR transition - provides information on the transition away from LIBOR and other IBORs towards using risk-free rates, including a detailed discussion on the specific issues for the loan market, derivatives market, and debt capital markets of adoption of risk-free rates. It also provides a glossary of key terms such as IBOR, SONIA, fallbacks and conventions.

LIBOR developments tracker - sets out developments relating to the transition away from LIBOR to risk-free rates. It covers developments relating to each of the LIBOR currencies: Sterling, US dollars, Swiss Francs, Japanese Yen and Euros, as well as developments relating to the transition from EONIA to €STR. It also contains section on regulatory updates, cross-currency updates, future developments and next steps to look out for.

Running a LIBOR transition project - provides a starting point to assist firms with planning and implementing a London Interbank Offered Rate transition project. It discusses key issues raised by UK regulators and includes a checklist setting out a number of key LIBOR impact areas that firms will need to investigate and address as well as points to consider when doing so.

LIBOR transition quick guide—legislative proposals on tough legacy contracts – provides focused information on the legislative proposals for addressing the issue of tough legacy contracts in the context of LIBOR transition. It summarises the legislative proposals for the UK, US and EU and includes a key points comparison table. It also discusses to what extent the proposals may address the tough legacy issue and how they may interact with each other.

The new prudential regime for investment firms

In December 2020, the FCA published the first of three planned Consultation Papers (CP20/24) on the new UK Investment Firm Prudential Regime which is due to be implemented in the UK on 1 January 2022.  The first consultation closed on 5 February 2021 with a Policy Statement and near final rules expected to follow in the first half of 2021.  In this article, CMS discuss CP20/24 and the UK’s approach to the new UK prudential regime for prudential firms.

HM Treasury’s review of the UK funds regime—a call for input

The overall aim of the review of the UK funds regime is to identify options to make the UK a more attractive choice to set up, manage and administer funds and to support a wider range of more efficient investments better suited to both UK and international investors’ needs.  HM Treasury published a call for input on 26 January 2021 which covers the review of the UK funds regime including relevant areas of regulation. This article written by Matthew Baker, partner and Chris Ormond, associate director and knowledge development lawyer at Bryan Cave Leighton Paisner takes a closer look at the call for input which closes on 20 April 2021.

Sustainable finance

Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (known as the Disclosure Regulation, environment, social and governance (ESG) Regulation or SFDR) is part of a broader legislative package under the European Commission’s Sustainable Finance Action Plan.  Most of the Disclosure Regulation obligations will come into force on 10 March 2021.  For further information, please see this article which was produced in partnership with Lora Froud and Tiffany Cox of Macfarlanes.  

In addition, Arun Srivastava of Paul Hastings (Europe) LLP, has written about the proposed mandatory climate-related disclosures for UK financial institutions following Brexit.

Covid-19 toolkit & blog

Coronavirus continues to pose significant issues for businesses of all kinds across the globe.

The Covid-19 toolkit has been created to provide in-house lawyers or legal advisers with easy access to news, practical guidance and Q&As from across a number of Lexis®PSL Practice Areas (subject to subscription) that relate to these key areas of concern.

In-house lawyers at financial institutions may find the following resources particularly helpful:

Please see the full range of COVID-19 content that you can access on LexisPSL Financial Services here: Coronavirus (COVID-19) and financial services—overview.

Not a subscriber to LexisPSL? See the free resources and information on our Covid-19 blog.

Keeping up to date

Horizon scanning dates you need to know, timelines, publications and announcements relating to financial services are also covered within LexisPSL Financial Services.

Click to view trackers, timelines and practice notes in the following topic areas:

Not a subscriber to Lexis®PSL?  For a free trial click here.

Useful financial services resources

P.R.I.M.E. Finance collaboration

We are proud in LexisPSL to support and work with P.R.I.M.E. Finance, whose mission is to ensure that the best expertise is available for the settlement of complex market disputes. As part of this, we are supporting P.R.I.M.E. Finance with its virtual conference programme.

Please sign up for these free events here.

The past P.R.I.M.E. Finance events are available for viewing for LexisPSL Banking & Finance and LexisPSL Financial Services subscribers here. Topics covered include:

  • Insolvency and Business Rescue in a pandemic
  • Sustainability in a pandemic
  • Dispute resolution in a pandemic
  • Financial regulation in a pandemic

Webinars

You can also sign up to upcoming and on-demand webinars in the LexisPSL library. Upcoming topics in 2021 include:

  • Financial Services Bill
  • Smart derivatives
  • Fintech, blockchain and smart contracts
  • Structured products and securitisation
  • Sustainable finance
  • LIBOR transitions

Sign-up to upcoming and view on demand:

Banking and Financial Services

Get connected…

LexTalk®:Financial Services  a Lexis®PSL community
Collaborate and network with a community of expert lawyers

LexTalk® is a new online community forum which gives LexisPSL subscribers the opportunity to post questions, hold conversations, participate in discussions and share best practice. It has been designed to provide a secure place for legal professionals to discuss legal developments, offer and receive peer support, and gain a sense of up to date market practice and advances in real-time. You can access and post questions on all of the dedicated practice area forums, including a dedicated community for LexisPSL Financial Services.

Click here to sign up and meet like-minded community members, create a profile, connect, share, and start participating today! Alternatively, you can access LexTalk® on the key resources tab on the LexisPSL Financial Services home page.

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About the author:
Melanie is a financial services lawyer and heads up the LexisPSL Financial Services team at LexisNexis UK.  The LexisPSL Financial Services module covers all of the latest developments in financial services regulation and is a key resource for financial services lawyers. Melanie previously worked in private practice at DLA Piper UK LLP and Orrick Herrington & Sutcliffe LLP and in-house at Morgan Stanley.