The following Financial Services practice note provides comprehensive and up to date legal information covering:
BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.
Clearing is a process which eliminates the normal risk that a party to a derivatives transaction will default (counterparty risk).
The main parties involved in the clearing process are:
a financial institution known as a clearing house, and
other financial institutions, usually banks or brokers, which enter into a clearing agreement with the clearing house—these institutions are known as clearing members of the clearing house or simply clearing firms
In cleared transactions:
all transactions are entered into by clearing members, which may do this for their own accounts or for the accounts of their clients, and
the clearing house interposes itself between the clearing members who have entered into the transaction, becoming a party to every transaction—each party therefore is exposed to the risk of the clearing house but not to the risk of the other party
Clearing members do not need to be concerned with the identity or credit quality
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BREXIT: UK is leaving EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For further guidance on the impact of Brexit on e-money requirements, see Practice Note: Impact of Brexit: Payment services and electronic money directives—quick
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