France Introduces New Replication Mechanism for Master
Agreements Ahead of Brexit
On Feb. 6, the French government put forth a statutory
instrument (l'ordonnance n° 2019-75 du 6 février
2019, hereinafter the l'ordonnance) containing changes to
French law, including the French monetary and insurance codes, that
take into account the United Kingdom's imminent departure from
the European Union. One such change would allow for existing master
agreements to be deemed to be replicated, subject to certain
conditions.
In order to facilitate the repapering of financial contracts in
anticipation of Brexit, Article 3 of the ordinance includes a
mechanism for "automatic replication" of master
agreements governing transactions relating to financial instruments
("instrument financier," which is broadly defined to
include securities and derivatives). Pursuant to the proposed
mechanism, a European counterparty having an existing master
agreement with a counterparty located in
