Law360 recently interviewed London-based Capital Markets practice co-head Stuart Axford and New York-based Finance special counsel George Williams Jr. on the UK’s influence over the European Union’s banking regulation in wake of its June vote to pull out of the union. The decision to leave has provided an uncertain climate across London’s most prominent sector, which has historically profited from the ability to permeate into markets across the EU from the UK. While the official Brexit conference is still months off, lawyers speculate on how market access and regulation will rebalance for banks.
The Brexit effects could be even more pronounced when it comes to policymaking. For example, some of the measures that the UK has long opposed, such as proposed rules on securitized structured finance transactions, could end up moving forward with the loss of the UK's voice on policy, says Axford.
Added Williams, "The UK, even if it left the [European Economic Area], would still participate in the Basel process, which was the source of most modern banking regulations even before the financial crisis. So to that extent, they can contribute to the gradual adaption of the focus and emphasis of the basic structure of banking regulation even without having any influence at all in the legislative process."
Axford and Williams were further quoted in Law360’s article, “6 UK Bank Regulations In-House Counsel Must Watch,” where they discussed UK banking regulations implemented since the 2008 global financial crisis and expected regulations in the wake of Brexit. Axford and Williams discussed MiFD II, the EU’s money laundering and market abuse regulations, data protection requirements, ring-fencing rules and CRD IV as key regulations. However, both agreed that negotiations between the EU and UK will heavily influence the future regulatory environment.
"All of the financial regulation is EU-level financial regulation except to the extent it has been goldplated,” said Axford. “There's a huge question mark over this, and at this moment, it's very difficult to know what to tell in-house counsel at banks because we don't know what the new regulatory environment will be."
Added Williams, "It seems to take a lot of work to maintain compliance with multiple jurisdictional requirements involving data. Even talking about how to fix it sometimes takes forever, let alone fixing it."
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