The European Union (Withdrawal) Act 2018 (EUWA) creates a new body of UK law, known as retained EU law, based on the EU law that applied in the UK on 31 December 2020. That retained law may have been amended under EUWA powers to ensure that it operates appropriately after Brexit. These amendments are not intended to make policy changes, other than to reflect the UK’s new position outside the EU, and to smooth the transition to this situation. As a result and from January 2021, there will be an EU version of SFTR and a UK version of SFTR containing substantially the same rights and obligations. On this page, references to “SFTR” include the EU and UK versions of SFTR, unless stated otherwise.
Whilst the substance of SFTR obligations are largely unchanged as a result of onshoring in the UK, a number of practical impacts on SFTR provisions arise as a result of the UK’s exit from the EU.
In particular, since the UK will become a non-EU (“third”) country, counterparties will need to ensure they report to a trade repository that is authorised under the applicable EU or UK SFTR regime. Trade repositories have created bifurcated reporting arrangements to facilitate this.
Further, while the SFTR reporting requirement for non-financial counterparties is expected to apply in the EU from 11 January 2022, the EUWA will not onshore the regime in the UK as those rules will not have applied in the UK on 31 December 2020. On 23 June 2020, the UK Chancellor also announced the UK will not, following Brexit, implement a reporting obligation for UK non-financial counterparties.
The issues arising in relation to SFTR as a result of Brexit have been the subject of much discussion in the press, by regulators and by trade associations. HSBC Global Banking & Markets has been working to establish arrangements to ensure we continue to service our clients through Brexit and beyond. For specific questions about your relationship and transactions with HSBC please speak to your usual HSBC contact in the first instance.