Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2020

Lord Wei Excerpts

Thursday 18th June 2020 Lords Chamber

[Lord Wei (Con) [V]]

My Lords, I declare my interests as in the register. I broadly welcome this instrument; it comes in extraordinary times, and we do not really have enough time to debate it, but we are at a critical point in our negotiations with the EU during the transition period. This is an incredibly technical instrument, and I am glad to be among the notable Peers who have far more expertise than I do on this matter.

In the limited time, I will focus on questions of sovereignty, because a lot of this has been picked off by our exiting the EU. I have had some contact with both the financial services industry and this area of derivatives, which, though often castigated in public, is crucial to our future as a financial hub. It is a growth sector and, as the world becomes riskier, we need to cement our position in this kind of trading globally to help reduce risk for businesses, organisations and markets around the world.

I have a couple of concerns for my noble friend the Minister to address. She may not have time to fully answer them all, so I would be happy to have a letter placed in the Library in response. My concerns are about sovereignty and how governance may shift over time, particularly in the course of our negotiations—and if they perhaps break down—and post this transition period. As mentioned, we are giving quite a bit of leeway to the Bank of England. What provision has been made, or what guidelines exist, to ensure that the Bank of England does not give away any powers during this period, given the freedoms it has around regulating and bringing in third parties to that regulation?

My second question is on human rights. We are obviously in a period when financial services are being pulled into discussions about past slavery and practices within supply chains. I would be interested to know how the sovereignty in this instrument works with third parties and the question of who decides about human rights. This could very much complicate these markets, which are huge.

Finally, and this is perhaps more of a speculation, but what thought has been given to the provisions in this instrument and decisions that might be made in the Bank of England? Should our relationship with the EU turn sour—I hope it will not—and the EU choose to impose further protectionist measures against us, this could somehow undermine our position in discussions. I look forward to hearing the rest of the debate, but I would welcome some answers from the Minister.