FIA submitted comments to the UK Parliament’s Treasury Select Committee consultation on transitional arrangements in relation to Brexit.
The letter noted that "significant market disruption, financial instability and regulatory uncertainty may result from a failure by the UK and the EU to deliver a smooth transition through the Brexit process," and urged policymakers to agree on transition terms in the first few weeks of negotiation following the trigger of Article 50.
FIA detailed the following key priorities:
- “Equivalence” for the UK and its market infrastructure. FIA urged policymakers to complete the process prior to the end of the two-year Article 50 process, failing which employ a grandfathering regime.
- Transitional arrangements. In order to avoid a “cliff-edge” and to give the global industry sufficient time to transition into the new regulatory paradigm, transition arrangements are necessary.
- Confirmation within the first few weeks of negotiation that transitional arrangements will be part of the deal. The end of 2017 will be too late, as firms will already be executing their contingency plans, based on worst-case scenario planning.
Additionally, FIA emphasized desired outcomes from the process, including:
- Continued access to market infrastructure and clients.
- Minimizing disruption, to protect the integrity of global markets and mitigate systemic risk.
- Avoiding policy determinations that fragment markets, collateral and liquidity.