My Lords, the memorandum for this instrument has been prepared by the Treasury. It contains information for the Joint Committee on Statutory Instruments. The Explanatory Memorandum says:
“This instrument is being made in order to ensure there is a coherent and functioning financial services regulatory regime”
in the UK
“following the end of the Transition Period ... This instrument makes amendments to an earlier financial services EU Exit instrument”
which will address
“deficiencies in retained EU law arising as a result of the UK's withdrawal from the EU, in line with the approach taken in other financial services EU exit instruments under the European Union (Withdrawal) Act 2018”.
It continues:
“To ensure the legal framework for settlement finality protections continued to operate effectively after the end of the TP, the FM&I Transitional SI introduced a Temporary Designation Regime”
which will ensure
“that non-UK systems benefitting from Settlement Finality Regulations … protection … at the end of the TP will continue to do so for three years from that point. The purpose of the TDR is to allow time for applications from such EEA systems under the UK SFR to be considered by the Bank of England. In order for systems to begin to benefit from the TDR, they were required to notify the Bank of England before the end of the TP that they wished to enter the regime. In order to remain in the TDR, EEA systems are required to submit an application to the Bank of England for SFR designation within 6 months following the end of the TP”.
This SI will amend
“the consequences for systems failing to submit an application within 6 months. Instead of immediately losing settlement finality protections under the TDR, systems will retain protections for a period of 30 months following the end of the TP. This ensures that UK firms which are using EEA systems that fail to submit an application for designation under the UK SFR, will have sufficient time to find alternative providers should those systems choose to stop providing services to UK firms”.
3.13 pm