My Lords, I thank my noble friend for moving this necessary SI and I support the measures it contains. However, I have a number of questions—I will try to be brief, as requested.
Clearly, there is an assumption that a 12-month transition period is sufficient to reach the agreement necessary, but can my noble friend tell me what provision might be made should it not prove sufficient, as many of us are concerned about? Perhaps 12 months seemed to be enough at the time, but will it be?
I also ask my noble friend—I declare my interests as set out in the register—what impact there might be on defined benefit pension schemes in a no-deal scenario, regardless of these measures, which I assume and hope we will approve today, with respect to financial derivatives and remittance of payments, including assessment of the risk that clearing or margin requirements could be triggered, and what provisions the Government may be able to make in changes to derivatives documentation entered into by those funds.
Another important area is the third-country requirements for the purposes of EMIR and whether this might mean that counterparty risks from EU banks may no longer rely on the exemptions under EMIR when entering into derivatives with UK entities such as defined benefit pension schemes. I note that the FCA, the Bank of England and the PRA are involved and would be grateful to know whether there have been any discussions with the Pensions Regulator in this regard. That is particularly relevant here for UK pension schemes if their bank counterparty in the EU is relying on exemptions available to pension schemes under EMIR’s mandatory clearing obligation.
Finally, when the UK’s asset management industry enters into intragroup transactions with EU group companies, should it consider whether those EU companies will continue to be able to rely on the exemptions under EMIR and what impact this SI or other government plans may have on those entities?
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