Whether the general election set for
12 December will bring an end to the
political rollercoaster that is Brexit
remains to be seen. At the time of writing
this update the media reported that
the only survey to forecast the hung
parliament in the last election predicts a
Conservative win of 359 seats translating
into a majority of 68. If this result were
achieved it would be plausible to expect
the new Conservative government to
push through the legislation approving
the revised withdrawal deal that Boris
Johnson agreed in October before or just
after Christmas.
Once the UK has completed its
ratification process it will be left
to the European Parliament and
then the Council to sign off on the
withdrawal deal. Currently, there
have been no noises from the
European Parliament suggesting that
ratification will be a problem. Should
the withdrawal deal be finalised,
the UK and the EU will move onto
negotiating the arrangements for its
future relationship. This phase of the
negotiations may prove to be more
tricky than the withdrawal deal.
Significantly, the Political Declaration
on the future UK / EU relationship does
not say too much as regards financial
services, so we are all a little in the
dark as to what will happen next,
although it is noticeable that despite
the amendments that were agreed in
October the original commitment to
conclude equivalence assessments
by the end of June 2020 remains.
Obviously this is a very tight timetable,
and it remains to be seen if it will be
achieved. The Political Declaration is
not legally binding so the requirement
is not set in stone and for fund
managers equivalence is only a partial
solution in the sense that, for example,
the UCITS directives don’t contain
equivalence provisions.
Regardless of where we end up, the
UK regulators will continue to engage
with the future EU agenda. This is not
only because the UK rulebooks start
from the same place, but also because
they also share common regulatory
priorities, challenges and concerns.
Turning to next year, and aside from
Brexit, what is generally on the
horizon?
Significant regulatory reform is on the
horizon principally in the form of the
new EU prudential regime for asset
managers as set out in the Investment
Firms Directive and Investment Firms
Regulation. In this issue, Simon
Lovegrove, Jochen Vester and Arup Sen
consider the new requirements of the
regime which will be supplemented
by level 2 measures which will be
published during the course of
next year. As we all know with EU
legislation, the devil is in the detail and
this will be no exception. Another key
area of regulatory reform is sustainable
finance. In this issue Flupke van den
Bogart, from our Brussels’ Government
Relations team, provides an update
on how the EU is progressing with its
sustainable finance action plan.
Whilst getting ready for the new
prudential regime and sustainable
finance reforms, asset managers
will also have to digest in 2020 the
delayed European Commission report
on the functioning of the AIFMD. The
AIFMD review is not, however, the
only review in town next year. Asset
managers will also have to keep an
eye on the reviews of MiFID II, UCITS,
the Benchmarks Regulation and the
Market Abuse Regulation. In this
issue, Imogen Garner touches on the
AIFMD review together with other
recent EU regulatory developments
when introducing our global asset
management webinar series.
Moving away from Europe for a
moment, regulatory reform impacting
asset managers continues in other
parts of the world. For instance,
in his Australia update, Matthew
Farnsworth covers the proposed new
regime for foreign financial services
providers dealing with Australian
wholesale clients. In Hong Kong, Etelka
Bogardi and Amy Chang cover new
SFC guidance on the use of external
electronic data storage. In their usual
United States SEC update, Steven
Howard and others discuss, among
other things, proposed amendments
to enhance retail investor protections.
In Canada, Daniel Lesie consider
FINTRAC’s recent announcement to
publicly name violators of anti-money
laundering rules.