Will they or won't they? This was a recurring prelude to a number of pressing Brexit questions during November. It was also a theme during the "other" attempts that aimed to challenge the primacy of EU law including via a referendum in Switzerland, the budget discussions in Italy, as well as more recently yet another challenge in the German Federal Constitutional Court on the compatibility of the Eurozone's Banking Union and the German Grundgesetz i.e. the constitution.

With the crunch vote in the UK's House of Commons set for December 11, assuming that the deal can get through in what will be a tough sell, the only thing that is certain for financial services is that the next round of negotiations during the transition period will be tough. If it took close to two years to finalize what "Brexit means Brexit" really means, and that ended in the Withdrawal Agreement, then the road ahead may present more questions and challenges than before. For financial services this is particularly the case as the non-binding political declaration on the future relationship between the EU and UK—which now stands at 26 pages rather than eight (see our deltaview below) still sets out the future vision in three bullet points and less than 250 words. That's considerably less than Chequers and places a lot of reliance on both sides coming together to grant equivalence decisions that would need to go well beyond what has been agreed in the past.

Some of this, while welcoming that there is a deal at least in sight, may not stop a false sense of security for financial services firms, that, according to regulators, should still be planning for readiness, even if there is emerging realization that Day 1 readiness is not as readily realizable.

Meanwhile, "Beyond Brexit" (yes, that still exists) EU financial reform stepped up another gear. The Eurozone took its first tentative approach to its own Budget to move the Meseburg Declaration ahead. The EU Commission continued to set out its 2019 priorities for financial services reforms affecting assets, institutions and capital. The EU, and more specifically the ECB, will tackle anti-money laundering priorities, an area not historically within its prudential regulatory mandate, in two specific ways: first by setting out more detailed supervisory tools and second by establishing a specialist AML office. We expect that this will translate into much more intrusive on-site and thematic reviews, coupled with a range of other shifts in supervisory scrutiny, amongst other things, a back to the future focus on the systemic impact of non-bank financial institutions and the sector formerly known as shadow banking.

We hope you enjoy this edition of our Newsletter and wish you all the very best for the pending holiday season. Please stay tuned for our dedicated overview of 2019 supervisory priorities across the EU and the Eurozone.

To see the deltaview, please click To read this Newsletter in full, please click here.

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