On 29 March 2017, HM Government officially served notice to the European Commission of the U.K.’s intention to withdraw from the E.U. under Article 50 of the Treaty on European Union. Accordingly, at the end of the two-year Article 50 notice period (29 March 2019), and in the absence of any new treaty provision between the U.K. and the E.U., the U.K. will lose the benefits of membership of the E.U. and will become, from the perspective of E.U. law, a “Third Country”. In these circumstances, the ability of U.K. firms to provide financial services into the E.U. from the day of Brexit will largely depend on the existing E.U. legal framework for service providers based in Third Countries. This framework comprises various regimes written into key pieces of E.U. legislation.
In this report entitled Issues of Legal Uncertainty Arising in the Context of the Withdrawal of the U.K. from the E.U.—the Provision and Application of Third Country Regimes in E.U. Legislation, the FMLC identifies and considers various issues of legal uncertainty related to the future classification of the U.K. as a Third Country with regards to E.U. law and examines the manner in which these issues affect the specific industry sectors that constitute the wholesale financial markets. In particular, the FMLC analyses legal complexity related to: (i) the scope of Third Country regimes, including the question of the range of market activities for which there is no concept of equivalence; (ii) the conditions that the U.K. and British regulators will have to satisfy in order that such a determination might be made; (iii) the timescale within which the U.K. might be able to secure a positive determination on access; and (iv) impact of losing these access rights and the further uncertainties which arise thereon.
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