On 23rd June 2016, the UK voted to leave the European Union by a majority of 52% to 48%, in what has been termed, “Brexit”.

Brexit Current Status:

Brexit has been delayed from 31st October to January 2020, and a snap General Election has been called for 12th December 2019. The political stalemate seen in the last 3.5 years in passing the legislation necessary to define how the UK leaves the European Union, should be brought to a head with the results of the upcoming election. Boris Johnson clearly seeks a mandate to get Brexit done, with or without a deal.

Market Structure Partners is following developments closely and we outline some key points below:

Timeline

Skip to: 2013 – 2014 – 2015 – 20162017201820192020

February 2021
1st February
Last possible date for Brexit to take effect under the current terms of the January 2020 ‘flextension’.
December 2019
12th December
The UK is due to vote in a General Election, called by the Government in an attempt to bolster the Parliamentary mandate for Brexit.
October 2019
31st October
The second proposed date for “Exit Day” passed, having been pushed back again to 31st January 2020.
29th October
MPs support Boris Johnson’s third attempt to call for an early general election (438-20), to be held on 12th December.
17th October
A deal is agreed between the UK and EU. The subsequent Withdrawal Agreement, fails to get support from the DUP, a key ally of the Conservative minority government.
September 2019
4th September
Boris Johnson’s second attempt to call an early general election with a vote in the House of Commons also fails. Again, he did not get the required two thirds majority of MPs (293-46).
4th September
Boris Johnson attempts to call an early general election for 15th October with a vote in the House of Commons. This fails to get the required two thirds majority of MPs (298-56).
August 2019
20th August
The European Council rejects Boris Johnson’s Brexit proposal, notably in objection of his proposition to lose plans to avoid a hard border between Ireland and Northern Ireland.
July 2019
25th July
European Commission president Jean-Claude Juncker advises Boris Johnson that the existing Withdrawal Agreement was “the best and only” deal possible. The UK Prime Minister pushes arrangements for a potential no-deal Brexit on 31st October, whilst updating the existing Withdrawal Agreement.
23rd July
Boris Johnson wins the leadership contest within the Conservative Party membership. He succeeds Theresa May as Conservative Party Leader, and therefore also as Prime Minister the following day.
May 2019
24th May
Theresa May announces her resignation as Conservative Party leader as of 7th June. This sparks a leadership contest for the leader of the party, who will also become the Prime Minister.
23rd May
The UK votes in the European elections.
21st May
Theresa May proposed a new Withdrawal Agreement.
April 2019
12th April
Theresa May wins a vote of no confidence with Conservative MPs (200-117), which keeps her in post as Tory leader for another year.
10th April
Donald Tusk, President of the European Council, calls a Special Council. He announces that the EU has granted the UK a “flexible” extension to trigger Article 50 to 31st October. A review will be held in June. Theresa May agreed to this on 11th April.
5th April
Theresa May writes again to Donald Tusk, President of the European Council, to ask for an extension to trigger Article 50 to 30th June, with the flexibility to leave earlier should legislation get passed. If a new date is not agreed, Britain will leave without a deal on 12th April.
3rd April
The President of the European Commission, Jean-Claude Juncker, rejects Theresa May’s requested extension of Article 50 of 22nd May, and sets an “ultimate deadline” of 12th April. However, the UK would still remain a Member State until 22nd May, prior to the upcoming European elections on 23rd May.
March 2019
29th March
The Withdrawal Agreement is again defeated in the House of Commons (286-344).

The original “Exit Day” as in December 2017’s amendment to the European Union (Withdrawal) Bill. This is rescheduled to 31st October 2019.

21st March
European leaders from the remaining 27 member states agree to an extension to Article 50, either:

  • 22nd May: if the House of Commons agrees to the Withdrawal Agreement before 29th March
  • 12th April: if the Withdrawal Agreement is not approved.

Theresa May’s extension request of 30th June is yet to be considered.

20th March
Theresa May writes to Donald Tusk, the European Council President, to request an extension for the UK to trigger Article 50 up to 30th June.
14th March
The House of Commons votes for Theresa May to negotiate a delay to Brexit with the EU, beyond the scheduled date of 29th March.
13th March
Parliament votes to reject a no-deal Brexit. MPs are now due to vote on whether to extend Article 50, which is due to trigger on 29th March.
12th March
The Withdrawal Agreement that would provide the terms of Brexit as proposed by Theresa May is defeated in the House of Commons (242-391). MPs now are due to vote on whether to permit a no-deal Brexit.
January 2019
16th January
Theresa May survives a vote of no confidence in the House of Commons (325-306), that was raised by the leader of the opposition, Jeremy Corbyn.
15th January
The Withdrawal Agreement Theresa May agreed with the EU was rejected in the House of Commons (432-202).
December 2018
12th December
Theresa May wins a vote of no confidence with Conservative MPs (200-117), which keeps her in post as Tory leader for another year.
November 2018
25th November
The leaders of the remaining 27 EU Member States endorse Theresa May’s proposed Brexit deal, describing it as the “best and only deal possible”. It now needs to be approved by Parliament in a vote, expected on 12th December.
15th November
Dominic Raab resigns as UK Brexit Secretary, 4 months after his appointment stating that he “cannot in good conscience support” the draft withdrawal agreement. He is succeeded by Stephen Barclay (16th November). Theresa May simultaneously emerges from calls of no confidence to continue to lead the Conservatives.
August 2018
20th August
The Government publishes a framework for the UK-EU partnership of the UK’s proposals for financial services following Brexit.
9th August
The Government publishes guidance on the Short Selling (Amendment) (EU Exit) Regulations 2018. It will ensure that the existing EU Short Selling Regulation (SSR) will continue to operate in the UK following Brexit.
July 2018
8th-9th July
The UK Brexit Secretary, David Davis, resigns. On the 9th, Dominic Raab is appointed to replace him. Boris Johnson also resigns as Foreign Secretary, and is replaced by Jeremy Hunt.
June 2018
26th June
The European Union (Withdrawal) Bill receives Royal Assent and becomes the European Union (Withdrawal) Act 2018.
12th-13th June
The amendments made to the European Union (Withdrawal) Bill by the House of Lords return to the House of Commons.
May 2018
15th 2018
The National Assembly for Wales consents to the European Union (Withdrawal) Bill.
The Scottish Parliament votes to refuse to consent to the European Union (Withdrawal) Bill.
March 2018
15th March
The European Commission sends back the draft withdrawal agreement with amendments for negotiation to the UK Government.
15th March
The European Commission sends back the draft withdrawal agreement with amendments for negotiation to the UK Government.
February 2018
28th February
European Commission publishes a draft withdrawal agreement.
January 2018
29th January
The remaining 27 member states of the EU, adopt further negotiation directives. Discussions between the European Commission and the UK can now begin.
16th-17th January
The European Union (Withdrawal) Bill passes and clears the report stage in the House of Commons. It then passes to the House of Lords.
December 2017
20th December
An amendment is passed to the European Union (Withdrawal) Bill which sets the “exit day” as 29 March 2019 at 11pm. It allows for the the date to be delayed, subject to ministerial approval.
15th December
The European Council formally approves the start of, and publishes guideslines for, the second phase of Brexit negotiations.
8th December
A Joint Report is agreed between EU and UK negotiators. It is endorsed by the EU Commission President and Theresa May.

European Commission announces its recommendation to the European Council that “sufficient progress” has been made in the first phase of Brexit negotiations.

November 2017
14th November
The European Union (Withdrawal) Bill starts the Committee stage in the House of Commons.
October 2017
20th October
The European Council determines that phase two of the negotiations cannot begin, due to a lack of sufficient progress being made.
September 2017
7th-11th September
The European Union (Withdrawal) Bill has its second reading in the House of Commons, and is debated by MPs. It passes its first vote on 12th September (326 to 290 votes).
July 2017
13th July
The Government publishes the European Union (Withdrawal) Bill which, on the day the UK leaves the EU, will:

  • repeal the European Communities Act 1972
  • transfer EU law into UK law
  • give the Government two years to correct issues arising from the transfer
September 2017
22nd September
Theresa May delivers a speech in which she proposes a 2 year “implementation period” after Brexit, during which existing market arrangements will continue to apply.
June 2017
19th June
Formal negotiations begin on the UK’s withdrawal from the EU; one week of negotiations will be held each monthly.
8th June
The UK votes in a General Election. On 9th June, the result was confirmed in a hung parliament, putting the Conservatives as leaders of a minority government.
May 2017
3rd May
Parliament is dissolved 25 working days prior to the upcoming General Election.
April 2017
29th April
Negotiating guidelines for the member states of the EU (excluding the UK) are adopted.
18th April
A snap general election is announced for 8th June to attempt to increase the government’s mandate for Brexit.
March 2017
31st March
President of the European Council publishes draft negotiation guidelines for the EU member states excluding the UK.
29th March
UK issues letter triggering Article 50 to EU to begin the two years of talks.
16th March
The European Union (Notification of Withdrawal) Bill becomes an Act with the Royal Assent, formally giving the Government legal power to begin the Brexit process.
13th March
Parliament passes the European Union (Notification of Withdrawal) Bill introduced in January into law, enabling the Government to legally start the Brexit process, once the Royal Assent turns the Bill into an Act.
February 2017
8th February
The European Union (Notification of Withdrawal) Bill passes its third reading in the House of Commons (494 to 122). It will pass to the House of Lords.
2nd February
Government publishes white paper to set out strategy for leaving the EU, and relationship with the EU post-Brexit.
1st February
The European Union (Notification of Withdrawal) Bill is passed in the House of Commons (498 to 114). It will pass to the committee stage in the House of Commons.
January 2017
26th January
The Government publishes draft legislation to start the ‘Brexit’ process: The European Union (Notification of Withdrawal) Bill.
24th January
The Supreme Court rules on the Government appeal to the High Court decision handed in November 2016. The decision agrees with the High Court, and confirms that Article 50 cannot be triggered without an Act of Parliament. However, the ruling states that Scotland, Wales and Northern Ireland’s devolved governments do have to be consulted.
17th January
Theresa May makes a speech stating that the UK will not remaining in the single market or the customs union, and that Parliament will have a vote on any Brexit deal.
December 2016
5th-8th December
The Supreme Court hears the Government’s appeal against the High Court’s ruling in November, which determined that Parliamentary approval must be gained in order to trigger Article 50.
7th December
House of Commons votes to back the triggering of Article 50 by the end of March 2018, as required by a High Court ruling in November.
November 2016
4th November
The High Court unanimously rules that Parliamentary authorisation must be gained for the Government to trigger Article 50. The case was heard in October 2016.
October 2016
20th-21st October
Theresa May faces all EU leaders for the first time at a meeting of the European Council. The EU did not respond to May’s limited comments.
13th, 17th, 18th October
The High Court hears the judicial review case to determine whether Article 50 (the withdrawal of the UK form the EU) can be triggered without Parliamentary approval. It was brought forward against the Secretary of State for Exiting the European Union.
2nd-5th October
Conservative Party conference. PM Theresa May announces the intention to trigger Article 50 (the formal exit mechanism by a Member State from the EU) in March 2017, with the UK leaving the EU by spring 2019.
July 2016
20th July
The European Council is informed that the UK will not assume it’s 6 month presidency of the Council in the second half of 2017 in light of the referendum result.
19th July
Government lawyers have told the high court at a hearing for the legal challenge that Article 50 will not be triggered this year.
15th July
The resignation of Lord Hill from the European Commission as a direct result of the referendum result takes effect. He was previously Commissioner with the important Financial Services portfolio. Whilst the UK is still a member of the EU it must have representation of a Commissioner, but the portfolio they will be assigned remains to be seen.
13th July
Theresa May is officially appointed Prime Minster by Queen Elizabeth II.
The new Cabinet is announced, featuring a new Chancellor of the Exchequer (finance minister) and newly created roles in light of the vote to leave the EU: Secretary of State for Exiting the European Union (“Brexit minister”) and Secretary of State for International Trade.
11th July
Theresa May is appointed the new Conservative Party leader following the knockout or withdrawal of all other candidates from the leadership contest. This resulted in David Cameron resigning much earlier than the expected date of 9th September following a full leadership contest.

June 2016
28th June
A high court order is sent to the government for a response to the legal challenge which is made up of several individual cases.
27th June
A legal challenge begins to question the legality of the Prime Minister assuming responsibility to invoke Article 50. The challenge asserts that an act of Parliament took the UK into the European Economic Community in 1972 with the European Communities Act, and it must therefore be Parliament that votes to leave by repealing that Act and making the decision to invoke Article 50. The key arguments are that the referendum was only advisory, and ultimately the sovereignty of Parliament should be enforced regardless of political outcome.
25th June
The UK’s Commissioner in the European Commission resigns with effect from the 15th July. Lord Hill had responsibility for financial services.
24th June
Result to leave by 51.9% to 48.1% is declared. The resignation of the Prime Minister David Cameron sparks a leadership contest for the ruling Conservative Party.
23rd June
The EU referendum is held in the UK asking voters whether the UK should remain in or leave the EU.
January 2013
23rd January
UK Prime Minister David Cameron promises an in-out referendum on EU membership, following a Conservative win in the forthcoming 2015 General Election.

What happens to regulation currently underway such as MiFID II?

The UK regulator, the Financial Conduct Authority (FCA), has made it clear to the firms it regulates that they must continue to both comply with relevant EU laws and to continue to prepare for legislation that is currently being adopted.

The UK did not exit the EU prior to September 2018, at which point MiFID II is already in force – The UK had to transpose MiFID II into national law by 3rd July 2017.

What are the options for implementing Brexit?

Following the UK’s ruling Conservative Party leadership contest, the new Prime Minister will realistically have three options through which to implement Brexit:

  • Option 1: To remain in the single market, “the European Economic Area”, in a Norwegian style deal. Under this option the UK would have to make a significant contribution to the EU budget and observe all single market regulations but have no say in making them. Under this scenario all the current legislative arrangements will remain unchanged.
  • Option 2: To exit the EU and the single market with grandfathering of existing rights. European laws made prior to this date would continue in effect. This is the most likely way that Brexit, if it involves leaving the single market, will be being managed, and the FCA has already indicated that it favours this approach if the UK leaves the single market. This approach will be simpler and will likely lead to less uncertainty than Option 3.
  • Option 3: To exit the EU and completely repeal EU laws and create a new legislative programme. This would result in all European laws, including those made prior to the date of exit being invalid and of no further effect. New UK legislation would be required to fill gaps in law but some of that will fall to the regional Parliaments and Assemblies in Scotland, Wales and Northern Ireland. This is the most complicated and least practical solution.

Of the various options available to the UK (discussed below) as it exits the EU, the most practical ones, and those most immediately favourable for financial markets, are to maintain all currently adopted EU legislation.

What is the likely impact of Brexit for the UK financial markets?

What appears to be certain is that in all Brexit scenarios, the UK will lose its current influence in moderating or improving development of future EU legislation:

  • For example under the creation of MiFID II, the UK moderated what it considered to be extreme views from other EU countries on areas such as high frequency trading and finding a balance to transparency of trading in all asset classes.
  • Equally the UK pushed topics on its own agenda such as unbundling of research and more competition in clearing.

The critical question that needs to be answered is whether UK financial market participants will have the ability to continue business passporting across Europe (where a firm in the UK can freely sell services into other EU countries without having to set up an entire business within each EU country).

If passporting is not a possibility then many global firms with European headquarters in London are likely to move into EU jurisdictions and take their managed funds and financing with them. The UK is likely to lose investment, financing and influence in the EU as a result, and may still have to make concessions in order to gain equivalence with EU regimes. Any rules the UK sets alone may have less influence both in the EU and globally because less is business is being regionally head-quartered there.

We are also yet to see what Brexit means for:

  • the future of the substantial Euro-denominated clearing business in UK clearing houses;
  • the role of ESMA continue in the UK in conducting central regulatory oversight as required in MiFID II, EMIR etc;
  • how the UK will enforce regulations that are currently adopted as law but yet to enter into force.

Sourced from European Parliament and European websites, financial and national newspapers and market practitioners.

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