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Brexit: Implications for secondary market members of the UK vote to leave the EU
Following the UK vote on 23 June 2016 to leave the EU, ICMA has been working actively with all its members, large and small, sell side and buy side, through its Market Practice and Regulatory Policy Committees, Asset Management and Investors Council (AMIC), Regional Committees and other Working Groups, as appropriate, to help them prepare for the international capital market implications of Brexit. ICMA’s mission continues to be the promotion of resilient and well-functioning international capital markets. For information on all of ICMA’s activities related to Brexit, please view the main ICMA Brexit page.

SMPC, the Secondary Market Practices Committee of ICMA, will keep secondary market members up to date with its assessment of relevant new developments and assist its members where possible. Below we have started a compilation of frequently asked questions (FAQs) based on the issues which have been raised with us so far. This list is expected to grow over time.

Secondary markets: Brexit FAQs

Q1: Will Brexit affect the ICMA Secondary Market Rules & Recommendations

One of the objectives of the ICMA Secondary Market Rules and Recommendations is to provide the Association’s members with a uniform and reliable framework that reflects current market practice for trading in debt and related securities (between members and between members and other professional market participants) as well as for the clearing and settlement of such securities.

The Secondary Market Rules and Recommendations automatically apply to all transactions between members of ICMA involving the sale and purchase of international securities as defined in Rule 2.2, but unless otherwise stated do not apply to the syndication and allotment process or to repurchase and to other transactions entered into under the Global Master Repurchase Agreement or similar master agreements. Where a transaction is subject to the rules of an exchange its rules apply.

At the time of concluding a transaction, the parties may specifically agree to exclude the Secondary Market Rules and Recommendations (`opt-out’), with the exception of the sections dealing with repo and collateral dealers and record keeping. An agreement to opt out of the rules and recommendations must be evidenced in writing.

For the purposes of the ICMA secondary market rules and recommendations, a rule applies to a transaction and is binding on the parties unless and to the extent permitted the parties specifically agree at the time of concluding the transaction that it shall be excluded. A recommendation, on the other hand, is of a non-binding nature and has moral force only. In other words, the parties to a transaction are encouraged, but not obliged, to follow a recommendation.

While the rules and recommendations are intended to apply to transactions in international securities (ie securities intended to be traded on an international, cross-border basis, and capable of settlement through an ICSD or equivalent), rule 2.1 clarifies that nothing contained in the Association’s rules and recommendations shall be construed as discharging the member from complying with the applicable local laws and regulations when concluding a transaction.

Since it would seem unlikely that the ICMA Secondary Market Rules and Recommendations would need to be updated to accommodate the possibility of regulatory or market practice divergence in one jurisdiction where they may apply, it is currently not expected that they would be changed as a direct consequence of the UK leaving the European Union. However, this is largely subject to what agreements and arrangements are negotiated between the EU27 and the UK.

Q2: Will Brexit impact EU Systematic Internalisers in the UK?

SIs operated in the UK by EU firms after Brexit should have a separate MIC codes.

The information contained herein is provided for general guidance only and should not be relied upon as advice. Recipients acknowledge that ICMA does not provide legal or other advice and expressly disclaims any responsibility for the information. Recipients should obtain legal or other professional advice as appropriate.


Andy Hill
Senior Director, Market Practice and Regulatory Policy; secretary to the ICMA Secondary Market Practices Committee.
Direct line: +44 20 7213 0335

Liz Callaghan
Director, Market Practice and Regulatory Policy, focused on secondary markets.
Direct line: +44 20 7213 0313

Gabriel Callsen
Associate, Market Practice and Regulatory Policy
Direct line: +44 20 7213 0334