Smoothing The Path For Financial Institutions On Brexit

The U.K.'s HM Treasury has set out its approach to the grandfathering of EU27 businesses on Brexit and to how existing EU financial services directives and regulations are to be adopted into U.K. law at the moment of Brexit ("onshoring")¹. It has taken this step following the enactment of the European Union (Withdrawal) Act 2018². The U.K.'s financial regulators, the Bank of England³, which includes the Prudential Regulation Authority, the Financial Conduct Authority⁴ and the Payment Systems Regulator⁵, have also issued statements on their respective approaches to grandfathering and onshoring.

The Likely Transitional Period

The U.K. and the EU have, in principle, agreed the terms of a transitional, or implementation, period to run from exit day (March 29, 2019) to December 31, 2020. During that "implementation" period, the U.K. would remain a member of the EU's single market in financial services. Passporting and other relevant EU frameworks would remain