Updated: Jan 15
Regular readers of this Data and Disruption blog will remember our blogpost from February 2019 in which we identified specific technical actions taken by policymakers both in Europe and in the UK designed to implement Brexit. We said then that these shifts pointed towards a no-deal outcome.
Here we are, in November 2020, and those rules are now being updated and positioned for implementation in Europe. This morning's PolicyScope Platform alerted us to the moves made by the European Securities and Markets Authority in the last 24 hours to implement Brexit.
Teresa May was still Prime Minister. Brexit was suppose to happen in six weeks time. Policymakers and negotiators were trading leaks and incendiary rhetoric in the media but most believed that ultimately a negotiated settlement would occur.
While everyone was chasing the latest high level (and sometimes colorful) comment from a senior policymaker or head of state, regulators were putting into place automatic rules that would take effect whenever Brexit finally did occur.
The inflection point signalling a no-deal Brexit outcome looked like this, with multiple moments where action exceeded rhetoric:
What Just Happened at ESMA?
EU securities regulators are preparing to disentangle their various trade reporting and data collection processes from the United Kingdom. The Financial Instruments Reference Data System (FIRDS) will be down for maintenance between 31 December 2020 and 7 January 2021 for this purpose. Trade reconciliation will no longer be possible for trades involving UK counterparties through this system. EU data held in the UK will have to be transported to ESMA servers. UK data held in ESMA servers will need to be transported to the UK before they are purged from the system.
ESMA released three separate statements with the details. A few of the details are new. But mostly the framework has not materially changed since February 2019. Anyone using our system for Brexit analysis in February would have read the details at that time. Today they are just refreshing their recollection. The rest of you should start digging in now.
How did we know? Because the PolicyScope Platform registered a small amount of activity regarding no-deal arrangements:
As we have said before, policy risk is not about big data. The volume of activity was small. But it led us directly to the ESMA documents. It took longer to write this post than it took to discover the documents and realize their importance.
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