The U.S. Commodity Futures Trading Commission (CFTC) today issued a joint statement in collaboration with three U.K. regulators, which are the Bank of England (BoE), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), regarding activities relating to the trading and clearing of derivatives between both countries after Brexit.
The statement reassured market participants that activities related to the trading and clearing of derivatives between the U.S. and the U.K. will remain the same even after Brexit.
Authorities from the two countries have taken measures to guarantee that regardless of whether the UK leaves the EU with a deal or not that there will be no interruptions to derivatives trading activities between the US and the UK. This will restore investor confidence in the markets of smooth operations after Brexit.
Mark Carney
Bank of England Governor, Mark Carney explained that:
Derivatives can seem far removed from the everyday concerns of households and businesses, but they are essential for everyone to save and invest with confidence.
As host of the world’s largest and most sophisticated derivative markets, the US and UK have special responsibilities to keep their markets resilient, efficient and open. The measures we are announcing today will do that. Market participants can be confident that the clearing and trading of derivatives between the UK and US will maintain the high standards of today when the UK leaves the EU.
J. Christopher Giancarlo
The CFTC Chairman, J. Christopher Giancarlo added that:
London is, and will remain, a global center for derivatives trading and clearing. Given the long-established cooperation between the CFTC and the Bank of England, the Financial Conduct Authority, and Her Majesty’s Treasury, I am pleased to announce these important measures. They provide a bridge over Brexit through a durable regulatory framework upon which the thriving derivatives market between the United Kingdom and the United States may continue and endure.
Andrew Bailey, FCA
The FCA’s Chief Executive, Andrew Bailey, commented that:
We have worked closely with the CFTC and other UK authorities on these measures to ensure continuity and stability for consumers, investors and other market participants, regardless of the outcome of the UK’s withdrawal from the EU. Cooperation with our international partners has always been an important part of our work, and it will remain so after Brexit. This partnership will support our day-to-day supervisory activities and rule-making, as well as encouraging open markets and the development of rigorous global standards, by ensuring that wherever firms operate, they are regulated on a consistent basis.
Philip Hammond
The Chancellor of the U.K. Exchequer, Philip Hammond concluded that:
The US and UK are fundamental to the smooth functioning of the world’s multi-trillion pound derivatives markets, with around 97% of the centrally cleared interest rate derivatives market located in London. The action we have taken today with our partners in the US will ensure that markets can continue to thrive without disruption, and is yet another example of the special relationship between our two countries.