Financial Services (Implementation of Legislation) Bill (HC Bill 333)

A

BILL

TO

Authorise the making of provision by reference to certain EU financial
services legislation adopted on or before, or no later than two years after, the
United Kingdom’s withdrawal from the EU.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

1 Power in respect of EU financial services legislation with pre-exit origins

(1) The Treasury may by regulations make provision—

(a) corresponding, or similar, to—

(i) the provisions, or any of the provisions, of any specified EU
5financial services legislation, or

(ii) any provision that might be made by a member State for the
purpose of implementing any provision of specified EU
financial services legislation, but

(b) with any adjustments the Treasury consider appropriate.

(2) 10In subsection (1)(b) “adjustments”—

(a) in relation to legislation mentioned in subsection (3)(a), (b), (c), (d) or
(f), means provision to mitigate or remedy deficiencies in the legislation
arising from the withdrawal of the United Kingdom from the EU, and

(b) in relation to legislation mentioned in subsection (3)(e) or (g), means
15changes to reflect, or facilitate the transition to, the United Kingdom’s
new position outside the EU, but does not include changes that result
in provision whose effect is different in a major way from that of the
legislation.

(3) “Specified EU financial services legislation” means—

(a) 20Articles 6 and 7 of the Central Securities Depositories Regulation,

(b) the Delegated Cash Penalties Regulation,

(c) Articles 37 and 38(2) of the Markets in Financial Instruments
Regulation,

Financial Services (Implementation of Legislation) BillPage 2

(d) the provisions of the Prospectus Regulation that apply from 21 July
2019 (see Article 49(2) of that regulation),

(e) any delegated acts under the Prospectus Regulation, other than
technical standards, that are adopted by the European Commission
5before 21 July 2019,

(f) Article 4(1) of the Securities Financing Transactions Regulation, or

(g) any EU Directive, or EU Regulation, adopted before, on or after exit day
as a result of any of the proposals listed in the Schedule to this Act,

as that legislation has effect in EU law.

(4) 10Section 8(5) and (7) of the European Union (Withdrawal) Act 2018 (provision
that may be made by regulations) apply in relation to regulations under
subsection (1).

(5) In paragraph 1(1) of Schedule 4 to that Act (power to provide for fees or other
charges in connection with functions of public authorities arising from
15provision made in exercise of the listed powers), after paragraph (b) insert , or

(c) section 1(1) of the Financial Services (Implementation of
Legislation) Act 2019.”

(6) No regulations may be made under this section after the end of the period of
two years beginning with exit day.

(7) 20Power to make regulations under this section is exercisable by statutory
instrument.

(8) No regulations may be made under this section unless—

(a) a draft of the instrument containing them has been laid before, and
approved by a resolution of, each House of Parliament, and

(b) 25that draft was laid more than 1 month after the Treasury published a
document (which may be one published before the passing of this
Act)—

(i) setting out what is proposed (subject to any revisions prior to
laying for approval) as the text of the regulations,

(ii) 30detailing which provisions (if any) of the particular EU
Directive, or EU Regulation, would not be covered by the
regulations, and

(iii) detailing any adjustments that would be made by the
regulations in reliance on subsection (1)(b) and giving the
35reasons for considering those adjustments appropriate.

(9) For the purposes of subsection (10)

(a) there are 4 reporting periods,

(b) the first begins with the passing of this Act and ends 6 months after exit
day, and

(c) 40each subsequent reporting period is the 6 months beginning with the
end of the previous reporting period.

(10) No later than 1 month after the end of each reporting period, the Treasury must
prepare and publish a report—

(a) on the exercise of their powers under subsection (1), or by virtue of
45subsection (5), in the reporting period,

(b) on their proposals for exercise of the powers in any future reporting
periods, and

Financial Services (Implementation of Legislation) BillPage 3

(c) tabulating, in relation to regulations made under subsection (1) in the
reporting period—

(i) the provisions of specified EU financial services legislation to
which the regulations relate, and

(ii) 5any adjustments made by the regulations in reliance on
subsection (1)(b) and the reasons for considering those
adjustments appropriate.

(11) Paragraph 32 of Schedule 7 to the European Union (Withdrawal) Act 2018
(annual reports on exercise of sub-delegated powers) applies also in relation to
10exercise of any rule-making power given to the Bank of England, or the
Prudential Regulation Authority or the Financial Conduct Authority, by
regulations under this section.

(12) In this section—

  • “the Central Securities Depositories Regulation” means Regulation (EU)
    15No 909/2014 of the European Parliament and of the Council of 23 July
    2014 on improving securities settlement in the European Union and on
    central securities depositories and amending Directives 98/26/EC and
    2014/65/EU and Regulation (EU) No 236/2012;

  • “the Delegated Cash Penalties Regulation” means Commission Delegated
    20Regulation (EU) 2017/389 of 11 November 2016 supplementing
    Regulation (EU) No 909/2014 of the European Parliament and of the
    Council as regards the parameters for the calculation of cash penalties
    for settlement fails and the operations of CSDs in host Member States;

  • “the Markets in Financial Instruments Regulation” means Regulation
    25(EU) No 600/2014 of the European Parliament and of the Council of 15
    May 2014 on markets in financial instruments and amending
    Regulation (EU) No 648/2012;

  • “the Prospectus Regulation” means Regulation (EU) 2017/1129 of the
    European Parliament and of the Council of 14 June 2017 on the
    30prospectus to be published when securities are offered to the public or
    admitted to trading on a regulated market, and repealing Directive
    2003/71/EC;

  • “the Securities Financing Transactions Regulation” means Regulation
    (EU) 2015/2365 of the European Parliament and of the Council of 25
    35November 2015 on transparency of securities financing transactions
    and of reuse and amending Regulation (EU) No 648/2012.

2 Extent, commencement and short title

(1) This Act extends to England and Wales, Scotland and Northern Ireland.

(2) This Act comes into force on the day on which it is passed.

(3) 40This Act may be cited as the Financial Services (Implementation of Legislation)
Act 2019.

(4) Nothing in this Act shall impose any charge on the people or on public
funds, or vary the amount or incidence of or otherwise alter any such charge
in any manner, or affect the assessment, levying, administration or
45application of any money raised by any such charge
.

Financial Services (Implementation of Legislation) BillPage 4

Section 1(3)(g)

Schedule List of proposals for the purposes of section 1

1 The European Commission’s proposal of 23 November 2016 for a Directive
of the European Parliament and of the Council amending Directive 2013/
536/EU as regards exempted entities, financial holding companies, mixed
financial holding companies, remuneration, supervisory measures and
powers and capital conservation measures.

2 The European Commission’s proposal of 23 November 2016 for a
Regulation of the European Parliament and of the Council amending
10Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable
funding ratio, requirements for own funds and eligible liabilities,
counterparty credit risk, market risk, exposures to central counterparties,
exposures to collective investment undertakings, large exposures, reporting
and disclosure requirements and amending Regulation (EU) No 648/2012.

3 15The European Commission’s proposal of 23 November 2016 for a Directive
of the European Parliament and of the Council amending Directive 2014/
59/EU on loss-absorbing and recapitalisation capacity of credit institutions
and investment firms and amending Directive 98/26/EC, Directive 2002/
47/EC, Directive 2012/30/EU, Directive 2011/35/EU, Directive 2005/56/
20EC, Directive 2004/25/EC and Directive 2007/36/EC.

4 The European Commission’s proposal of 28 November 2016 for a
Regulation of the European Parliament and of the Council on a framework
for the recovery and resolution of central counterparties and amending
Regulations (EU) No 1095/2010, (EU) No 648/2012, and (EU) 2015/2365.

5 25The European Commission’s proposal of 4 May 2017 for a Regulation of the
European Parliament and of the Council amending Regulation (EU) No
648/2012 as regards the clearing obligation, the suspension of the clearing
obligation, the reporting requirements, the risk-mitigation techniques for
OTC derivatives contracts not cleared by a central counterparty, the
30registration and supervision of trade repositories and the requirements for
trade repositories.

6 The European Commission’s proposal of 13 June 2017 for a Regulation of the
European Parliament and of the Council amending Regulation (EU) No
1095/2010 establishing a European Supervisory Authority (European
35Securities and Markets Authority) and amending Regulation (EU) No 648/
2012 as regards the procedures and authorities involved for the
authorisation of CCPs and requirements for the recognition of third-country
CCPs.

7 The European Commission’s proposal of 20 December 2017 for a Regulation
40of the European Parliament and of the Council on the prudential
requirements of investment firms and amending Regulations (EU) No 575/
2013, (EU) No 600/2014 and (EU) No 1093/2010.

Financial Services (Implementation of Legislation) BillPage 5

8 The European Commission’s proposal of 20 December 2017 for a Directive
of the European Parliament and of the Council on the prudential
supervision of investment firms and amending Directives 2013/36/EU and
2014/65/EU.

9 5The European Commission’s proposal of 12 March 2018 for a Directive of the
European Parliament and of the Council amending Directive 2009/65/EC of
the European Parliament and of the Council and Directive 2011/61/EU of
the European Parliament and of the Council with regard to cross-border
distribution of collective investment funds.

10 10The European Commission’s proposal of 12 March 2018 for a Regulation of
the European Parliament and of the Council on facilitating cross-border
distribution of collective investment funds and amending Regulations (EU)
No 345/2013 and (EU) No 346/2013.

11 The European Commission’s proposal of 12 March 2018 for a Directive of the
15European Parliament and of the Council on the issue of covered bonds and
covered bond public supervision and amending Directive 2009/65/EC and
Directive 2014/59/EU.

12 The European Commission’s proposal of 12 March 2018 for a Regulation of
the European Parliament and of the Council on amending Regulation (EU)
20No 575/2013 as regards exposures in the form of covered bonds.

13 The European Commission’s proposal of 24 May 2018 for a Regulation of the
European Parliament and of the Council amending Regulation (EU) 2016/
1011 on low carbon benchmarks and positive carbon impact benchmarks.

14 The European Commission’s proposal of 24 May 2018 for a Regulation of the
25European Parliament and of the Council amending Regulations (EU) No
596/2014 and (EU) No 2017/1129 as regards the promotion of the use of
SME growth markets.

15 The European Commission’s proposal of 24 May 2018 for a Regulation of the
European Parliament and of the Council on the establishment of a
30framework to facilitate sustainable investment.

16 The European Commission’s proposal of 24 May 2018 for a Regulation of the
European Parliament and of the Council on disclosures relating to
sustainable investments and sustainability risks and amending Directive
(EU) 2016/2341.

17 35The European Commission’s amended proposal of 12 September 2018 for a
Regulation of the European Parliament and of the Council amending
Regulation (EU) No 1093/2010 establishing a European Supervisory
Authority (European Banking Authority); Regulation (EU) No 1094/2010
establishing a European Supervisory Authority (European Insurance and
40Occupational Pensions Authority); Regulation (EU) No 1095/2010
establishing a European Supervisory Authority (European Securities and
Markets Authority); Regulation (EU) No 345/2013 on European venture
capital funds; Regulation (EU) No 346/2013 on European social
entrepreneurship funds; Regulation (EU) No 600/2014 on markets in
45financial instruments; Regulation (EU) 2015/760 on European long-term
investment funds; Regulation (EU) 2016/1011 on indices used as
benchmarks in financial instruments and financial contracts or to measure
the performance of investment funds; Regulation (EU) 2017/1129 on the
prospectus to be published when securities are offered to the public or

Financial Services (Implementation of Legislation) BillPage 6

admitted to trading on a regulated market; and (EU) Directive 2015/849 on
the prevention of the use of the financial system for the purposes of money-
laundering or terrorist financing.