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Britain and EU finalize temporary derivatives clearing accord

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The Bank of England and the European Union’s securities watchdog said on Monday (28 September) they have agreed on the information-sharing arrangements needed for the bloc’s banks to continue using clearing houses in London from January to June 2022, writes .

Britain’s unfettered access to the bloc ends on 31 December, and Brussels had already decided it would grant temporary access for UK clearing houses for 18 months.

An updated cross-border regulatory accord between the BoE and the European Securities and Markets Authority (ESMA) was also needed to implement the decision.

ESMA said the temporary access will apply to three clearing houses in Britain: the London Stock Exchange’s LCH, energy and agricultural futures and options clearer ICE Clear Europe, and LME Clear, which clears trades on the London Metal Exchange.

It has classified ICE Clearing and LCH as being “systemically important”, meaning they will face close EU scrutiny on an on-going basis, particularly in any market crisis.

Brussels has said that banks operating in the EU should use the 18 months to cut their “excessive reliance” on clearers in London.

During this period, ESMA will conduct a comprehensive review of the systemic importance of each UK clearer and take any “appropriate measures” to address financial stability risks.

Measures could include deciding that a foreign clearer or some of its clearing services are of such substantial systemic importance that it should not be allowed to serve EU customers, ESMA said.

“ESMA undertakes to conduct such a comprehensive review in due time,” it said.

LCH clears the bulk of euro-denominated interest rate swaps, a derivatives contract that helps companies shield themselves against unexpected moves in borrowing costs.

LCH said it would continue to engage and cooperate with authorities regarding “long-term permanent” access to the EU.

But EU policymakers and the European Central Bank have long wanted euro clearing relocated to the eurozone, now seen by the bloc as all the more urgent due to Brexit.

Eurex Clearing in Frankfurt has been building up market share in euro swaps clearing but banks so far have been loathe to shift large positions there due to cost and complexity.

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Scottish government comment on efforts to stay in Erasmus

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Minsters have welcomed the support of around 150 MEPs who have asked the European Commission to explore how Scotland could continue to take part in the popular Erasmus exchange programme. The move comes a week after Further and Higher Education Minister Richard Lochhead held productive talks with Innovation, Research, Culture, Education and Youth Commissioner Mariya Gabriel to explore the idea. Until last year, over 2,000 Scottish students, staff and learners took part in the scheme annually, with Scotland attracting proportionally more Erasmus participants from across Europe - and sending more in the other direction - than any other country in the UK.

Lochhead said: “Losing Erasmus is huge blow for the thousands of Scottish students, community groups and adult learners - from all demographic backgrounds - who can no longer live, study or work in Europe.“It also closes the door for people to come to Scotland on Erasmus to experience our country and culture and it is heartening to see that loss of opportunity recognised by the 145 MEPs from across Europe who want Scotland’s place in Erasmus to continue. I am grateful to Terry Reintke and other MEPs for their efforts and thank them for extending the hand of friendship and solidarity to Scotland’s young people. I sincerely hope we can succeed.

“I have already had a virtual meeting with Commissioner Gabriel. We agreed that withdrawing from Erasmus is highly regrettable and we will continue to explore with the EU how to maximize Scotland’s continued engagement with the programme. I have also spoken with my Welsh Government counterpart and agreed to keep in close contact.”

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Britain and EU at odds over bloc's diplomatic status in UK after Brexit

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Britain and the European Union are at odds over the British government’s refusal to grant EU representatives’ full diplomatic status in London after Brexit, write Estelle Shirbon and Elizabeth Piper in London and John Chalmers in Brussels.

An EU member state for 46 years, Britain voted in a 2016 referendum to leave, and completed its tortuous journey out of the bloc on 31 December, when Brexit fully took effect.

The BBC reported that the Foreign Office was refusing to grant the same diplomatic status and privileges to EU Ambassador Joao Vale de Almeida and his team as it gives to envoys of countries, on the basis that the EU is not a nation state.

Following the report, Prime Minister Boris Johnson’s spokesman: “The EU, its delegation and staff will receive the privileges and immunities necessary to enable them to carry out their work in the UK effectively.

“It’s a matter of fact that the EU is a collective of nations, but it’s not a state...in its own right,” he said.

Under the Vienna Convention governing diplomatic relations, envoys representing countries have certain privileges such as immunity from detention and, in some cases, prosecution, as well as tax exemptions.

Representatives of international organisations whose status is not covered by the convention tend to have limited and less clearly defined privileges.

The European Commission, the 27-member bloc’s executive body, said the EU’s 143 delegations around the world had all been granted a status equivalent to that of diplomatic missions of states, and Britain was well aware of the fact.

“Granting reciprocal treatment based on the Vienna Convention on Diplomatic Relations is standard practice between equal partners and we are confident that we can clear this issue with our friends in London in a satisfactory manner,” said Peter Stano, the commission’s spokesman for foreign affairs.

Stano added that when Britain was still an EU member, it had been supportive of the diplomatic status of EU delegations.

“Nothing has changed since the UK’s exit from the European Union to justify any change in stance on the UK’s part,” he said.

A British government source said the issue of the EU delegation’s status was subject to ongoing negotiations.

Former US President Donald Trump’s administration lowered the status of the EU delegation to Washington in January 2019, but later reversed the decision and restored full diplomatic status to it.

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Michel Barnier awarded European of the Year Award by Irish European Movement

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Head of Task Force for Relations with the UK, Michel Barnier, was presented with European Movement Ireland’s European of the Year Award at an online award ceremony this morning (21 January). The European of the Year Award recognises and pays tribute to individuals and organisations that have made outstanding contributions to developing the connections and relationship between Ireland and Europe.

Accepting the Award, Mr Barnier said, “It is truly an honour to receive the “European of the Year” award.” He said, “My team and I were particularly attentive to the concerns voiced by all the different parties and communities of Ireland and Northern Ireland [during EU/UK negotiations]. We travelled several times to Ireland and Northern Ireland, we went to the border, we walked on the peace bridge in Derry/Londonderry. Above all, we listened to and engaged with students, workers, business owners and rural communities. Because Brexit is first and foremost about people…The memories of the Troubles are never far away.

“I continue to believe that we have to be both patriotic and European – patriote et européen. The two go together. That is why preserving EU unity was so important throughout the Brexit process. The unity and solidarity between EU countries was visible at every step of our negotiations with the UK. Contrary to what many predicted at the time of the 2016 Brexit referendum, Brexit did not trigger the end of the European Union, but the strengthening of its unity…Together, we can build a Europe that not only protects but also inspires…A Europe that continues to make us stronger together. Ní neart go cur le chéile. There is no strength without unity.”

DUBLIN : 21/1/2021: Noelle O Connell, CEO and Maurice Pratt, Chairperson of EM Ireland hosting a virtual ceremony from Dublin to present Michel Barnier with the EM Ireland European of the Year Award. Picture Conor McCabe Photography.

European Movement Ireland Chair, Maurice Pratt paid tribute to Michel Barnier, “Over a long and difficult period, Michel Barnier sought to protect and advance European interests and values while also working to maintain a close and productive relationship with the United Kingdom. The agreement which has been reached is positive. While issues remain, it has provided clarity to businesses and citizens. Also, and importantly, this agreement can be built upon, with a view to ensuring the EU and the UK have an ongoing, constructive and mutually beneficial relationship in the future. Ireland, as a proud EU member state with the closest relationship to the UK, has a role to play as a future facilitator in that process.”

Honouring Michel Barnier for his work to secure an EU-UK trade deal, Noelle O Connell, CEO of EM Ireland said, “This award recognises individuals and organisations that have made outstanding contributions to developing the connections and relationship between Ireland and Europe. Promoting this greater engagement amongst the countries and peoples of Europe is something that Mr Barnier has pursued with distinction throughout his career. He has never wavered from his commitment to safeguarding, protecting and upholding the integrity and values of the European Union and in doing so has protected Ireland’s interests throughout the Brexit process.”

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