In the post-Brexit regulatory landscape, the UK and EU transaction reporting frameworks are evolving separately and diverging. This presents a core challenge for firms that operate in both markets as they now have to navigate two distinct sets of rules, demanding increasingly robust compliance solutions.
What are the Main Areas of Divergence Between the UK and EU Post-Brexit?
There are several primary points of difference emerging between the two regimes, in particular relating to:
EMIR vs UK EMIR
The European Market Infrastructure Regulation (EMIR) was onshored into UK law in 2020 to create UK EMIR. Initially, the two regimes were almost identical but have since evolved and diverged, particularly following the EU’s implementation of the EMIR Refit in 2024. The regulatory oversight of the UK EMIR is now handled by the Financial Conduct Authority (FCA) instead of the European Securities and Markets Authority (ESMA), and amendments have been made to legal terminology, including mandating the use of FCA-approved trade repositories (TRs). Further divergence is expected as the UK continues to tailor the framework to its specific market needs.
MiFIR vs UK MiFIR
The EU’s review of the Markets in Financial Instruments Regulation (MiFIR) in 2024 also brought some significant divergence for regulations that were closely aligned before Brexit. Key changes from the EU’s review were not immediately adopted into UK MiFIR, and instead, the FCA and HM Treasury conducted their own review of the UK domestic reporting regime. This UK-specific consultation explores areas of divergence from the EU’s review, such as replacing the daily rolling ISIN with a new UPI+ system and the potential removal of certain data fields from transaction reports. The FCA are expected to publish a consultation paper on the proposed changes in late 2025.
What is the Impact of Post-Brexit Divergence on Firms?
The growing divergence between the UK and EU regimes creates significant practical implications for firms operating across both jurisdictions. These firms now face complex operational challenges, including potential dual reporting obligations and the technicalities of managing data governance and routing for two separate regulatory regimes. As these regimes continue to diverge further, firms must now monitor two distinct sets of reporting requirements and support two parallel reporting frameworks to ensure ongoing compliance. These factors all contribute to a significant and ongoing resource burden, which increases compliance costs and operational risk. The post-Brexit divergence in transaction reporting is a complex and evolving operational reality. Firms must proactively assess their reporting frameworks, invest in technology that can support compliance across multiple regimes and dedicate resources to monitoring evolving regulations from both the UK and the EU. These are the essential steps firms should follow to build a resilient and adaptable transaction reporting framework that is capable of withstanding future change. Operating across both UK and EU regimes?
Contact Novatus Global to streamline your dual reporting frameworks and stay compliant amid growing regulatory divergence.
