Brexit Week 1

JG:  Good morning everybody, Happy New Year! A very strange new year and certainly as difficult a start to the year as I think we could have all imagined so I hope everyone is coping well. We've never had so many people log on to a webinar at one time which is why we were slightly delayed, one or two technical gremlins. I hope that is because everyone is interested in the topic and people aren't viewing this webinar as a first bit of home schooling in the morning for your kids, I suppose unless your kids are studying international law or indeed history, but there we go!

So, what are we going to do this morning? We are going to talk about the trade deal. So with me, we have, with a bit of luck, Ross Denton who is our Head of International Trade. Ross, are you here?

RD:  I am here, good morning everybody.

JG:  Morning Ross. So Ross is going to explain kind of how we got to the trade deal, we're going to, you know, unashamedly do a bit of law, what it is, what it isn't, what it looks, some of the key features that people might be interested in, not necessarily with such a financial services bent for the first few minutes, but just more generally how it works. And then good morning, James. James, are you there?

JP:  Yes Jake, can you hear me?

JG:  I can James. And James is going to take us on and talk about the trade deal and financial services or the trade deal and the lack of financial services or what comes next for financial services but we will find out. Gita will discuss GDPR data issues as well. We've had quite a few questions come in about key points on that and Gita will discuss that as well, she has one or two technical gremlins this morning but she will be here in time I am sure and if not…

GS:  Hi!

JG:  Hi Gita, good morning!

GS:  Hi, good morning Jake!

JG:  We've got you there. There is no Brexit webinar that is complete without Tim talking about MiFID and DTO and I think Tim emailed me on, Tim was it the 31st or the 24th? I'm going to say the 31st of December.

TC:  It was the 31st, round about lunchtime when the FCA dropped that announcement.

JG:  In Tim's incredulous email which is "I can't quite believe they've done this now and they haven't done it in a way that we could have exactly imagined either". So that's the DTO and a kind of form of relief and equivalence. I'm going to touch a little bit upon some changing bits of jurisdictional relief in Europe, financial services towards the end and then we're going to have questions. I suspect we might go on slightly beyond the hour to take some questions. We're going to then next week talk a little bit more about emerging themes in financial services and employment and contractual issues as a result of Brexit, so this week we're going to be slightly less on what we see in the market but if we've got a bit of time I'll cover a couple of those things.

Most of you have said that the best thing that I give to webinars is a fact of the day and I thought for my first webinar of the year I'll do my fact of the day. I'm actually going to revisit the first fact I ever gave on the webinars because there was a slightly difference audience there and it was my biggest and best fact so I thought we'd start with this one. This is my fact of the day and this is the one that still staggers me or "steggars" me. The Stegosaurus dinosaur roamed the earth around 156 million years ago whereas the Tyrannosaurus-Rex lived around 65 million years ago, therefore the Tyrannosaurus-Rex and the Stegosaurus were never around at the same time and the Tyrannosaurus is closer to man than it is to the Stegosaurus. Interestingly enough the Tyrannosaurus is closest to a chicken than anything that is alive at the moment. But there you go, that is my fact of the day, the Stegosaurus and Tyrannosaurus never lived at the same time, Tyrannosaurus is closer to us, so there we go. Ross, I know I did an equally absurd fact last time we spoke but, Ross, good morning, let's explain the trade deal and see where we end up. So, Ross, over to you.

RD:  Thank you, and I would just like to echo Winston Churchill in saying "some chicken". Anyway. Right, let's look at the trade deal. I am just, as Jake said, I am going to unashamedly just go through some things at a high-level to try and put the deal into context before we dive into the financial register. There is some stuff that's really kind of unashamedly non-financial reg stuff in this presentation but I think it's really, really, really important to just cover that because it is one of the central misunderstandings that has been propagated around the trade deal, so I'm going to go a little bit into that just so that everybody knows what we're thinking here.

So, how did we get here? Well I think this is a well-worn path so I'm not going to spend an enormous amount of time on it. We had the referendum in 2016, we served the notice of intention to withdraw which is the Article 50 in 2017, there was a process agreed which kind of boxed the UK in or at least made most of what we are now seeing inevitable in that we had to withdraw from the European Union before the European Union would start talking to us about the future trade relationship. In order to get there we had to have this thing which is a transitional period but was referred to as the "implementation period". The Withdrawal Agreement was signed in October 2019 after Johnson became Prime Minister and then we actually withdrew from the European Union on 31 January of last year. The Withdrawal Agreement was, in effect, a sort of substitution of the rights and obligations of the EU and UK under the European Union treaties in a separate agreement so it's effectively like a sort of side letter that applies the rights and obligations of both parties to each other even though the UK, at that point, was no longer a member state of the European Union.

That all sounds kind of okay, the slight wrinkle there was, of course, that did not impact, the bad arrangement between the EU and the UK did not impact, how third countries thought about the UK so for third country purposes the UK was in fact no longer a member of the EU and couldn't take the rights and obligations that that country would be giving to the EU. So you will have seen, and I've been sort of blogging on this rather chaotically in the past few months, that the UK has actually been out there signing what have been called "rollover deals". These are trade deals that replicate pretty much word for word the EU relationships with third countries but don't really go beyond it, really the only one that does is Japan. So, at the moment we've got a series of sort of 58, I think it's 58, trade agreements that have caused us simply to stand still in our relationship with those third countries, Japan is the only one that goes beyond that. The implementation, sorry the implementation is due to expire, it did expire on 31 December 2020 and then we're finally into the future trading arrangements.

So, if we can go to the next one.

So, let's just do a little bit of a quick refresher as to why we have to end up with this type of arrangement. So, everything really turns around the WTO. The WTO effectively works on the basis of non-discrimination. So, there are two versions of that, two flavours: first of all, don't treat your trading partners worse than you treat your own traders, that's what's called "national treatment", very important for financial services etc, and don't treat your trading partners differently, that's what's called a "MFN". So that's a general obligation on all WTO members that they should not treat their trading partners differently from one another so everybody gets the same treatment, a very powerful principle. So, the EU and the UK can't treat others differently because the MFN applies. So if we actually go out of the European Union, we are into the WTO world, we have to treat each other the same. So, that creates a very basic problem. How do we have duty-free treatment between the UK and the EU without having to give that to everybody? So, looking at it from the UK perspective in that lime green box, the UK can drop all trade restrictions for everybody, including the EU, so everybody gets free market access to the UK. Or, it can conform its trade with the EU to trade with other EU members, which is the route that we wanted to do. So, if we can go to the next slide please.

So, the way in which the EU and the UK, and all other trading partners that are looking to give each other preferential treatment, the way they have to do it is to fit themselves in a number of the exceptions that apply, that are set out inside the WTO rules, and the two that are the most important exceptions, because they allow you to not comply with MFN, they are exceptions that are actually built in to the WTO treaty system, are free trade areas, "FTAs", and customs unions. So the MFN obligation is suspended if you meet the conditions of the FTA or a customs union. Now, if you look at the very brief terms of Article 24 of the GAT, you can have an FTA and an FTA allows you to suspend the most favoured nation treatment on goods, if substantially all trade in goods is duty-free. In order to be able to do that you need rules of origin because those goods that we're talking about have to originate in each of the parties, or in the parties, to the free trade agreement.

The customs union doesn't require you to have those rules of origin because you have a common external tariff and once you're inside the common external tariff the goods move around freely. There is an equivalent under the GAT system, which is the services equivalent of the GAT, where, again, if you substantially eliminate all discrimination between the parties you can then suspend MFN. The point there, obviously, as you'll all know, is that there's a big difference between goods and services because goods are dealing with borders and tariffs whereas in the services sphere you don't have borders as such and you certainly don't have tariffs placed on services. If you look at the last line there, because of that phrase "substantially all", you cannot have sectoral FTAs in goods or services, it just won't work because you have to have substantially all of your goods or all of your services that are outside the non-discrimination principle is going to be suspended in respect of. So, if we could go to the next slide please.

So, we have this thing called the "ladder of doom" now referred to probably more appropriately as the "bubbles of doom" and this, I'm not going to go through this very carefully, but all really to say is that as you go down from the single market that we were in down to WTO which was what we were being threatened with, the terms on which we trade with the EU and the EU trades with us get considerably worse and worse so there's more cost, more friction, more inefficiency built into any of those relationships each of the steps go down. So, where we've ended up is the grey one in the middle, the free trade area. We didn't get to the bottom rung, WTO, which would have been mildly disastrous for all of us, so we can draw some comfort from the fact that we're sort of halfway down the ladder of doom. So, if we go to the next slide please.

Right, so let's actually look at what the TCA is. TCA is the acronym for Trade and Cooperation Agreement and really it's important to dwell on that title because it really shows you that the agreement between the UK and the EU is effectively two things. First of all, it's an international agreement on how the EU and UK are going to trade in goods, plus a number of other provisions that allow the EU and the UK to cooperate across a number of fronts. It does not cover trade in services in the same way as it does in goods, so there isn't an FTA-type arrangement on services in the same way that there is for goods. This arrangement, the TCA, does not replicate in any material sense the relationship under the single market. Let's just have a little dwell for a couple of seconds on that. In the single market arrangement, this is effectively something that's grafted on top of the customs union so if you're looking back up the ladder of doom, the layer above is a customs union and the layer above that is the single market. There, you can see there, so you've got the customs union and the single market, so if we go back to that next slide there. The point is that once you're in that single market you can offer, or the members of that single market or that customs union, can offer each other regulatory benefits that they don't have to offer to anybody else. So they start to build between themselves systems that relate to services, investments, possibly even the movement of goods, other things like health, welfare, security etc, which they don't need to offer to anybody else, and that is sort of one of the key things that the European Union has focused on, which is when the UK leaves or has left the European Union, that single market layer disappears entirely. If you look at that practically, what that means is that if you're looking at for example employment, when we were a member of the European Union the UK was faced with one EU-level single market version of employment rules so you could see that everybody had the rights and obligations that were set at the EU level and it was very simple.

As a third country, the UK clicks down, or at least loses that single market treatment and clicks down to the next level which is the member state level. So if you're looking at it from an employment law and immigration perspective, you effectively – employment is the best example – you start to look at 27 national laws, not one single EU law, because we don't have the benefits of the single market anymore, so all those things that we've been happily using in the past few years which are laws that come from Brussels, no longer apply to the UK as such, you have to start looking at member state laws. So, losing the benefit of the single market is actually a really important loss to us. The trade portion, just dwelling on that for a moment, it is technically a free trade area that's consistent with Article 24 of the GAT. It is a very thin trade agreement but the important thing to note is that very unusually it does cover all goods moving between the UK and the European Union including agricultural goods. Now this is very unusual because generally speaking agricultural sectors are protected and even in free trade agreements states don't want to give up their rights and the rights to protect their markets and, therefore, they don't usually include those in free trade agreements. The EU and UK have agreed to do that so actually we are not only covering substantially all goods, we are covering all goods.

So the other thing, the other part of the agreement is, a sort of bundle of provisions - I think that's the best I can really call them, the best way of thinking about them - covering many of the areas that are on the right-hand slide of that slide so digital trade, DP, movements of capital, intellectual property, public procurement, energy taxation, and the best way I can throw a blanket over these sort of disparate provisions is to say these are how the UK and the EU have unplugged themselves from the single market, well, unplugged themselves generally and the UK from the single market. So they're effectively the bare minimum that is necessary between the UK and the EU to carry on doing these things in a way that isn't totally disruptive to our economies so we have to have some rules on digital trading and some rules on data protection. You will see the bare minimum of those rules picked out in the TCA. If you look, for example, at public procurement, again, although we are subject to public procurement rules inside the WTO through our various memberships of the WTO, we have come up with new sort of rights and obligations or thin rights and obligations that allow us to carry on doing public procurement between us in a way that's not the same as the single market but not wholly disruptive to both economies. So that's how I see each of these provisions and the thing that I think is really, really important to note is that I think these thin provisions aren't going to be enough to sustain either of our economies going forward. So I think one of the important conclusions from this is that there's going to be more, there's going to be more on all of these things including, as Jake and Tim will say, more on financial services. We just have to have something that's better than what we've got in the TCA. So, I think the way to think about the TCA is it's the start of a continuing and probably constant negotiation between the EU and the UK. Can we go to the next slide please.

JG: Before we do, Ross, I've got some questions coming in, so please do email the questions to FinancialRegulatoryEvents@ashurst.com or just to me or Ellie and we'll find a way through, and I must admit I was thinking exactly the same thing! Bottom right of your, I'm going to call it the "doughnut"! The trade portion is a free trade area consistent with Article - my son is doing roman numerals so I know all about this.... - 24 of GAT, as you said, is a thin trade agreement but it does cover all goods. So, question: If it covers goods, why are we seeing so much about paperwork and Kent and lorries and paper? What are we missing here, or is this not capturing that area as we think about things mentally?

RD:  Well, yeah, I mean I think it does come up in the following slides but I'll answer your question now, Jake. If you go back to this MFN principle, when we were inside the single market there wasn't a requirement for us to, when you move goods between the member states of the EU because we're inside the customs union, there was no requirement for paperwork, it's a single market and goods flow freely around there as do services actually with supposedly no hindrances and indeed there were virtually no hindrances. When we leave the European Union, the European Union and the UK have to have a way of checking that the, well they have to have a way of dealing with the fact that they treat all other third country goods and all other third country services in a way that's kind of like a third country so you have to have some checks when goods come into the UK from say China or from the US, you have to have some regulatory conditions when those goods come in or when the services are provided and all we are now being told is under the MFN principle of the WTO, we now have to have those barriers between the UK and the EU to check that those goods and those services are the same, so we have to comply with MFN. More importantly, I mean I'm going to come on to this, this is where it really gets quite sticky quite quickly for manufacturing business is that in order to be able to get the duty-free treatment you have to be able to demonstrate that the goods that you are shipping into the EU or into the UK originate in the UK when they go into the EU and therefore you need to have a process whereby those goods actually get checked, the origin gets checked and then they can say yes or no to the relief of the duty so you actually have to have that step in order to make the rules of origin function properly. Regulatory stuff as well, you have to have, there are lots of regulatory requirements out there including things like technical barriers to trade, SPS sanitary and phytosanitary rules and we just have to apply those to the European Union as a result of the MFN principle, we can't give the EU a free pass just because we like them otherwise we'd have to give it to everybody.

JG:  Thank you very much. On to the next slide, and sorry for getting the question in early but, yeah, I concede, so we go from MFN to this kind of paperwork issue and then on to here.

RD:  Yeah, so just very quickly on this, I mean one of the things that's really quite interesting is that there are a significant number of working groups and committees that have been set up under this. It does suggest that there are many open issues as I've just said so I think prepare for constant negotiations with the UK trying to move nearer to the single market treatment with the European Union resisting. There are a significant number of detailed annexes including WTO rules on customs and rules of origin and joint declarations so there's a lot of devil in a lot of detail which to be honest I think we're all still working through and working through the implications of so I think if anybody tells you that they know exactly what the TCA says and how it's going to operate they might be pulling your leg. I think it's also important to note and I have said this before but I think it is worthwhile repeating, is that we, the UK at least and to a certain extent the European Union, has a very new rulebook about how we relate to the European Union and also when we've taken back control of our you know borders etc etc how we do it ourselves, so there's a lot of new law out there that you need to learn. I think there's also going to be some new additional law as a result of the TCA on both sides of the Channel. I've already seen draft documents coming out from the European Union that are looking at how the TCA is going to be implemented, some very you know detailed provisions there. You'll see the same on the UK side so I do think you need to be on top of, you and your legal teams, need to be on top of making sure you understand what rules apply to you but more importantly or as importantly that they are rules that you can work with and they are fit for purpose. If you don't like them you need to figure out what you can do about them because I think you are going to find there's going to be a lot of challenges of the new law and there's going to be a lot of speed bumps along the way as we find our way through this new legal system. So could we go to the next one please.

So, let's look at the impact of the TCA that we can work out now. Well, as we've mentioned, the UK has unplugged from the European Union and specifically it's left the European Union, it's now a third country proper, it has similar rights and obligations as that third country because we've now finished the implementation period. As I've already mentioned we have in effect had to replicate all the EU FTAs with almost 60 countries. As I said, the only one that really sort of is a sui generis free trade agreement is the UK Japan one which goes beyond replication of that EU equivalent.

Right, so now we get to this issue here of just flagging it. So all goods moving between the UK and the EU will have to pay customs duties unless the exporter can show that the goods originated either in the UK or the EU. These are complex and onerous rules of origin, sorry the word origin has gone missing there for some reason. As Jake has already mentioned, a lot of discussion about the paperwork that needs to be done, so whether or not we had the free trade agreement where the goods would be, where the duties would be suspended or not have to be paid because of the free trade agreement, in any event whatever happened, if we just went to WTO we would always have had to have had new border controls and paperwork associated with it so that is a bottom line cost that was unavoidable as a result of leaving the European Union. It has not changed because we have the TCA, the TCA has given us some new additional sort of benefits if you want to think of it that way, but we're going to come onto that in a slide in a moment.

The other thing that I want to say is that there was this, a lot of discussion very much in a vacuum by the journalists, about the retaliatory provisions under the level playing field provisions. As far as I can see it, the retaliatory provisions that are in the agreement relate simply to control of subsidies. So, the European Union effectively won this relatively significant battle in the TCA because we do see controls on subsidies from both parties, it is reciprocal obviously as most of these or virtually all of these things are. So, both parties have agreed that if they undertake certain subsidies and those subsidies have an impact on the other party then, in certain circumstances, very long-winded, very detailed, very complicated, if that party doesn't agree to stop providing those subsidies the other party can retaliate. Now, the point there, not that the party can retaliate or you know insist on the aid being recovered, they can do that as well, but they can then impose counter-veiling measures that seek to offset the subsidy that's been provided by the other party and the most important thing to note is that it doesn't have to be in the same sector. So, for example, and this is really only an example, I'm sort of spit-balling on this, let's imagine that there is a subsidy given on agricultural goods for the production of a certain agricultural product, if the EU says we don't want you to do that and the EU insists on doing it, the European Union is effectively unconstrained as to where it retaliates so it could say, well this costs me x, I'm just going to take x from you in, for example, financial services or for example road transport, you know, I'm going to slow down certain things or I'm going to charge you more for licenses to land aircraft etc. So it is really, really important that businesses keep an eye on this provision because you're always at risk of being retaliated against which I think is a really bad place to be and therefore I think we have to have sensible discussions with not only with governments but with the European Union as well as to where they see these rules panning out so that we can make sure that we don't get retaliated against.

Just on those points very quickly, the remedial measures have to be strictly necessary and proportionate in order to remedy the significant negative effect. Another important point is, what are the lists of prohibited subsidies, so subsidies that without any further discussion you know you can't have, and those include unlimited state guarantees, rescue and restructuring aid including to financial service providers where you don't have a credible restructuring plan, any subsidies that are contingent on export, any subsidies that are contingent on local content, use of local content. So that's actually boxing in Prime Minister Johnson's ambitions quite dramatically because lots of these things have been talked about by the government. The other thing interestingly to note is that both parties have agreed that this system, whatever happens within it, will not go out to the WTO for dispute settlement so we've agreed that whatever happens it's just going to be us arguing amongst ourselves without going to an external arbitrator to deal with. Can we go to the next slide please.

Right, so the key question we've now got for most manufacturers and traders is, are goods originating? So, looking at this we've got a number of blocks here. So, as I've said originally, the TCA does include all goods including agricultural goods and virtually all of those will be originating because the test effectively says if you grow them, dig them up, breed them in one country then they originate in that country, so cows and sheep and all that sort of stuff are grown in the UK, coal that's dug up in the UK or whatever, corn that's grown, is going to be UK and can go into the European Union duty-free because it originates but many manufactured goods will not. So, as I've said, the tariffs will only be suspended on movements between the UK and the EU if the goods originate in the other and that is a really, really big point because we were being told that this was tariff-free quota-free access to the European Union and vice versa when really what they should have said was it's tariff-free if those goods originate in the other party which is a really, really different question. So what we've ended up with is a very complicated tariff line-by-line picture and I'm pretty certain, and I'm happy to be disabused of this, but I'm pretty certain that there was no consultation or at least minimal consultation between both sets of governments and industry as to what rules they wanted and as to what rules were helpful to them so I think we've got the situation where a lot of people now are struggling with understanding how these rules will apply to them.

Two broad methods that are included in the agreement: first of all, a change of tariff heading or a change of tariff sub-heading, so if you look at the goods that don't come from the UK, what are called "non-originating goods", they all have to change their tariff heading or tariff sub-heading into something new in order to be able to admit it to the European Union, so everything has to change, that's quite a technically difficult test to meet for lots of things. So in the alternative we've got a value added test so as long as you add a certain amount of value in for example the UK to your goods you can also get those goods as qualifying as originating in the UK. The problem is that the percentage required is 50 per cent which most supply chains would find difficult to actually assess and, more importantly, 50 per cent is a very high value-added in the UK because we don't do a huge amount of manufacturing in the UK, we use a lot of manufactured inputs. One slight saving grace is that we do allow EU originating products, so EU and UK inputs, to count as originating so you can actually use supplies from the EU to do your UK production and to count for your UK origin and vice versa. There are tolerances woven in so, for example, you know, if you get within a certain amount of per cent for a certain percentage of time then it's okay, so the 50 per cent isn't hard and fast. There are specific detailed auditable processes for proving this originating status and this is why the customs border is really, really important as Jake has stressed and we sort of come to the really practical point which a lot of this stuff is going to be so complicated, when you combine that with duty rates that are relatively low, I think you're going to see a lot of manufacturing businesses in the UK and EU say it's not worth the cost of complying with these rules of origin, of re-tooling supply chains to get to the situation where we want to avoid the duties and they're just going to pay the duties and pass them on to us as consumers. So, let's go to the next slide.

I'm just going to very briefly touch on this before we get to the next one. So, what if the goods are not originating, if you can't actually prove that your goods originate in the UK or in the EU? Well, as I said, you can pay the duty, that's probably the best outcome if there's a low duty rate, you can separate your supplies from third countries to the UK and the EU so that would mean having separate, for example, distribution centres that you build, obviously that's a cost to your system, you might be bringing all your goods from China in to the Netherlands and shipping them round the EU including the UK and, obviously, if you do that you'll now potentially incur duty twice, once when it comes into the European Union and once when you send it to the UK because it's not originating in the EU. You could rejig your supply chain to get more EU or UK inputs to take advantage of that accumulation rule, in most cases you can add more value in the EU or the UK but that would mean sort of tooling up businesses to actually do that or you can produce sub-components that meet the tests, so this is an interesting sort of little specialisation in this agreement. If you bring in a component and you actually work on that and that sub-component then passes the test you don't just say, oh 50 or 60 per cent of that is now originating because as the component has changed or has been processed you can now say one hundred per cent of that is originating so you can take that mixture of Japanese and UK and you know, whatever it is, Russian apart so as long as they pass the test then all of it becomes UK and then you can put that sub-component into something else so that's another way of doing it and that will be very, very important for car manufacturers if they're doing a lot of this. So, I think that's my last slide. Jake, is that right, or have I go one more?

JG:  No, that is spot on. I think we are going to take some questions as they come in but what I wanted to do is, James, I think it's the time to bring you in on what I think people are itching to see which is whether or not this trade deal saved financial services, so spoiler alert, I don't think it did! But, James, why don't you explain to us what it did and didn't do and we'll kind of work our way through it from there.

JP:  Oh you are rotten, can you hear me?

JG:  Yeah we…

JP:  Yeah, you are rotten, you always steal my thunder don't you! [Laughter]  Anyway, business as usual, eh readers! So, thanks Jake, for nothing!

So, those of you I guess who attend our RBC seminars will know that we said consistently during 2020 that, firstly, the UK and the EU would agree a trade deal and that that deal wouldn't deliver much for financial services and without blowing our trumpet too much I think we were right on both counts. But what we've got today as Ross was saying isn't the end of the story by a long chalk as I'll explain in a few minutes. So, on this slide, financial services regulations are addressed in two documents: first, the TCA itself, there are sections relating to services generally obviously including financial services and specific sections relating solely to financial services. Second, there's a very short joint declaration which hasn't got the same legal standing as the main agreement but, frankly, it's more significant in relation to the issue of market access which is going to concern most of you and I'm going to talk about both documents. But the message really is and to answer my question at the top of the slide that the end result for financial services really has yet to emerge and it's not yet clear when that will happen and what that result is going to be. So, next slide please.

So, to start with the TCA, the Trade and Cooperation Agreement itself, when you start to look at it – and hands up incidentally, unlike Ross I don't spend much, I'm a financial regulatory lawyer and I don't spend my whole life in international trade agreements – but when you start to look at it you're momentarily encouraged because there are numerous clauses of the kind that Ross was talking about, you know, headed 'Market access', 'Most favoured nation' and so on which look as if they might be delivering the kind of reciprocal access which we all want. But, don't be deceived, they aren't really achieving that and the reason is that when you look at it, for every section and clause in the agreement, there are laundry lists of exceptions, reservations, non-conforming clauses so-called and so on which effectively take away with one hand what's been given with the other as it were, and let me try to illustrate that with the position described on this slide. The net effect of the various provisions I have referred to are that first, the TCA doesn't deliver mutual recognition or equivalence, it also leaves the EU free to make equivalence decisions for, say, Australia or Japan without doing the same for the UK, and the basic point which we've mentioned before remains that the licencing regime in each EU 27 member states will apply to UK firms in the same way that it does for local firms, subject, obviously, to local transitional provisions or exemptions. So really there are quite a lot of words in the TCA on market access but they don't really deliver what you would want them to do, although I guess in that respect they are not radically different frankly from the position under other EU trade agreements that I've had a look at, so not terribly encouraging there. Next slide please.

So, to complete the picture on the TCA, here are some things which are and aren't included in the agreement. So, in terms of things that are included, first there's a best endeavours obligation to implement Basel, IOSCO, FATF and other international standards, that finds its way into most of these kinds of trade agreements. There's mutual access to clearing and payment systems operated by public entities such as governmental organisations and to ordinary cause funding and refinancing facilities from official public sources but not, as I say here, to the lender of last resort, you know, this was used during the financial crisis. Self-regulatory organisations, that includes exchanges and actuary clearing houses as well in the UK and the EU, must admit the other party suppliers on a non-discriminatory basis but, as I was saying a moment ago, that's subject again to a raft of reservations, so, for example, that is still subject to local licensing requirements where they apply. Kindly, and on a slightly different note, the UK finally had to accept state aid restrictions in the area of financial services as part of the level playing field negotiations. These restrictions relate to the restructuring of banks and insurance companies as well as liquidity facilities but [inaudible] a party so you know the UK could still pass or use laws to facilitate restructuring where that's necessary to ensure financial stability, that's the so-called prudential carve-out. In terms of what the agreement doesn't contain on the right-hand side there, so as I've said, no equivalence, yet at least, and there's no further general transitional periods established. There is an interesting – second point down there – there's an interesting commitment by each party to review its existing legal frameworks in relation to services generally but that doesn't apply to financial services. Now, I suspect that may be because the EU doesn't want anything like that to sort of muddy the waters for equivalence. The next two things aren't in the agreement and, frankly, from a UK financial services perspective we should be pretty pleased they aren't there. First, there's no restriction on delegation or outsourcing by, say, an EU person to a UK person. Now, you know, it would have been pretty extraordinary if the agreement had included that when it's otherwise relatively light on financial services but, apparently, maybe a bit surprisingly, the EU did press for this apparently. Now, in my view that doesn't mean that the EU can't impose those kind of restrictions separately but it is quite interesting that the EU seemingly thought that introducing such restrictions outside the agreement might actually now be problematic given the commitments in the agreement. And then, lastly, on the right-hand side there, financial services aren't part of the horizontal cross-retaliation provisions that Ross was talking about. So, for example, if the EU can't explicitly use the breach of the provisions relating to, say, aviation to punish the UK in the area of financial services, and, again, it would have been pretty odd if that weren't the case but the UK did, the UK government did mention this as one of their wins in negotiations, though I think you might want to take that with a small pinch of salt at least! And, of course, that doesn't necessarily mean that any future equivalence decisions won't be affected by the political climate between the UK and the EU, that may well happen particularly, obviously, if there are disputes under TCA so even though there's no strict cross-retaliation nonetheless the things we're looking at may be affected indirectly by disputes under the TCA in terms of the effect on the political climate. So, next slide please.

So, [inaudible] much for the TCA, no I think as far as we're concerned the more important but also the more uncertain bit is the joint declaration of the cooperation, a bit of a mouthful, but in case you're wondering this is actually the whole declaration set out in this slide, not many words, nonetheless I'll try to sort of unpack it a bit for you. The highlighting of some words is ours obviously to try and bring out the key points. The timeline here really splits into two parts: first, there's an MoU and then we hope equivalence processes after that. Frankly, the second bit of that is going to be a much longer timeline than the first bit. Taking the MoU first, the UK and the EU will agree or they will endeavour to agree the MoU between now and March covering the items that are set out there in paragraph numbered 1. This will include some stuff that you always find in MoUs between regulators such as sharing information and consultation in relation to global initiatives. Then indeed actually standard provisions of this kind actually are in the existing MoU between the UK and the EU 27 regulators and that MoU will be replaced by this one but also there will be some special provisions though to be clear we don't expect that the MoU is going to contain binding obligations on the EU or the UK to make equivalence decisions although obviously the UK has already done some of that. The second sentence if you look at that in paragraph 2 makes it clear that the EU will want to preserve its unilateral autonomous decision-making process and that's been the EU's position, you'll remember, ever since the original political declaration agreed by Theresa May's government. However, the hope is, I think, that the MoU will at least set out some meaningful processes for consultation and maybe escalation so that some, say, future divergence by UK from EU rules won't result in equivalence just then being withdrawn 30 days later after the alleged divergence. By the same token, of course, then having talked about equivalence the MoU isn’t going to stop the UK from changing its own rule book either so thus there are really no hard commitments in this document from either party on either divergence UK or equivalence EU. I guess really what those words unilateral and autonomous really mean is that the EU is going to move ahead with equivalence when they think it's in their best interests to do so. So, finally the last slide please.

So, finally just a few questions on the joint declaration. So, first: "Will equivalence continue to be as political as it has been?" Well, I think I have probably answered that. Work on the MoU will include some political negotiation over the next two months, led on the UK side by John Glen the Treasury Minister and then I suppose it’s a bit late in the day, we should certainly welcome that, but once that negotiation on the MoU is concluded and the UK has extracted any further helpful language, will equivalence revert to being a kind of more technical exercise between regulators where I think, as I said, probably not. The problems will continue to be the EU's fear of future divergence by UK and its desire to encourage relocation to the EU and, again, as the Commissioner has said, as I said equivalence will only be granted if and when it's in the EU's interest to do so. So, the answer is I am afraid that equivalence will continue to have a political dimension. So, second: "Will a MiFID equivalence process begin before the middle of this year?" Now, you may remember on this that the Commission said last year that the EU couldn’t start the process on MiFID equivalence before the new granular powers in the IFD came into force, though I must admit not many of us found that a particularly convincing argument. Now, given, though, that nothing I guess is going to happen much on equivalence before the MoU is agreed, hopefully in March, that may not land up being a big problem over the next two or three months. But maybe more importantly though if we get an MoU in March I think that’s very unlikely to mean that a procession of equivalence provisions will follow in the two or three months after that. Realistically we are looking probably until late in 2021 and probably into 2022 before we see really any final tangible outcome from all this.

Third question there: "Enhanced Cooperation". Well, I think we are going to have to wait and see exactly what enhanced cooperation will mean in practice. We expect though that it will involve a process for consultation and dialogue on future regulatory changes, both global changes, and in terms of changes proposed by each party. And that, I hope, will begin to promote greater stability and, indeed, a means of managing the future regulatory divergence that I was talking about. And then, lastly: "Will the EU agree to extend its existing equivalence regimes which confirm market access so they cover a fuller range of financial services?" So, I have referred there to some of the key directives. Of course, I should say CRD there has got equivalence regimes relating to credit risk and consolidation but not an equivalence regime relating to market access and that’s the one we sort of really care about. So, I think the answer here it is not impossible, obviously, that there will be such extensions in the future but it's likely to be a much slower process, I think, that even, say, MiFID where an equivalence process is already baked into the directive, you know so to achieve this EU law is going to be need to be changed, so that probably implies, you know, a period of likely years, not 12 or 18 months. So, to wrap up and to answer my original question: "Deal, no deal or deal yet to come?" I think the answer is despite what's in the TCA, really it’s a deal yet to come but exactly what will be delivered and when that is going to happen isn’t clear. And really, unlike most deals you and we do, the other party here, the EU, is going to retain strong discretion over what it will and won't deliver, actually outside the four corners of the agreement. So, on that sort of slightly downbeat note, Jake, I don’t know if questions have been coming in or?

JG:  Sure, I do. I'm going to go back a slide. So, I've got a question from me and a question from the audience. I'll start with the audience first. We have got an MoU, didn’t we have an MoU to discuss equivalence already baked in and shouldn’t this already have happened? Is this symbolic or is this anything new?

JP:  Well, no, I think there is two things, Jake. Obviously, we had an original political declaration that covered some of the same sort of similar ground to this, you know, as part of the, tacked on as it were to the withdrawal agreement, so there was that, and then of course we have seen a couple of MoUs including the MoU I referred to between the UK regulators and the EU 27 Regulators. What this is really doing is kind of novating those, I suppose you would say, and I think the hope is it's obviously going to go slightly further, but how further we are going to need to, I think to wait and see. As I mentioned, I was trying to think of some things that it might contain which are a bit harder. The one I could come up with is the escalation process, you know, in particular which might apply, you know, if an existing equivalence decision became unstable for some reason because of future divergence by the UK. What I think is rather hard to see is that, you know, this MoU is going to deliver some sort of silver bullet promise by the EU to deliver, you know, say MiFID equivalence and frankly I just think it's, you know, I can't see they are going to tie their hands like that before March.

JG:  Understood, and the second question, and it's one I have been asked so interested in your view: What's in it now for the Europeans to grant equivalence on financial services? My best guesses are pressure from 23 or 24 of the European nations on three others or, simply, very inefficient markets and market volatility that is viewed as completely out of kilter with what anyone expected. Beyond those two things, why grant it? I am interested in your view on that one I suppose so I can give mine after.

JP:  Look, I agree with that. Obviously, I think there was a kind of popular wisdom at one point I think that there would be complaints from EU institutions, you know, insurance companies, pension funds and the like, and indeed I guess some other EU investment firms as well in terms of problems in accessing UK infrastructure as it were, investment infrastructure. But, realistically, I tend to agree with you, I think that’s only going to become a clamour, might become a clamour in the event of really some significant market dislocation or market volatility that really, you know, hurts EU institutions financially and, of course, one or two of the areas are sort of key, you know obviously key [inaudible] due clearing obviously they have already been dealt with, so to some extent the EU has already picked its targets there. Apart from that, it seems to me that unless across the broader canvass as it were, political canvass, suddenly the EU decides it really needs to move in some convincing way, it's rather hard to see how it's going to happen. I certainly think, judged in isolation, I tend to agree that it's difficult for the moment to see quite why they cannot get a move on.

RD:  It's Ross here. I would add just very, very briefly: I think the international law arguments about what the EU is doing on equivalence are relatively weak, but you might see if things got really, really bad that the UK might, say, bring an action in the WTO to say it's being discriminated against vis-à-vis parties that have equivalence agreements. That’s one argument that I have heard put out there. And secondly, I mean obviously it is a relatively strange situation – and I have had discussions with senior people in the WTO about this – it's a relatively strange situation that the EU would say: well, on the 31st of December 2020 everything was fine for UK service providers to provide services into the EU, but as of the 1st of January, with nothing happening in between, they weren’t. So, I mean is the argument that suddenly their prudential interests spring up and suggest that they should spend years or months or years working on an equivalence decision? It's kind of a relatively weak argument for the EU so there are thin arguments that the UK might have whether they will take them, I don’t know, but there are possible arguments there at the international level.

JP:  Thank you. And lastly we have had quite a few questions come in saying: "Would the TCA or LAC allow us to do this from France with a UK person or the UK to do this with a French person? We have got some on fund management, some on Ucits, some on brokerage." The answer to the question is the TCA hasn’t changed any of this so it's no more favourable, no more disfavourable but, to be blunt, doing business with a UK broker or a UK broker doing business with a French investment firm is more difficult now and the starting position is: No, unless there is an exemption or you are relying on reverse solicitation or you structure it in such a way whereby the UK firm isn’t necessarily doing the main part of the regulated activities but I am trying to address all five different questions that have come in on that in one go.

JG:  I think, as I was saying, the fundamental point is really that you go back is that the clauses that Ross was talking about: national treatment, most favoured nation etc, the problem is there is a very wide and beefy set of carve-outs from those things in the agreement, the chief one which interests us is that local licencing agreements continue to apply. None of this really is detracting from that basic point. So there may be local transitions where the TCA is really not going to help you there.

JP:  Gita, I think we are going to do five minutes on data and then, Tim, you will bookend it with DTO. Actually let's do it this way. I have a couple of questions. Actually, yeah no we are not going to do that, sorry, Gita, we are going to come to you, a couple of questions I think we need to pick up. Ross, rules of origin and cars. How can the car industry in the UK and EU demonstrate their car parts originated in the UK or the EU? Don’t many parts come from Japan or elsewhere outside the EU, some from Turkey? That’s come in from one of our very large clients. So, a bit of thought on that would be great.

RD:  I think, at the moment, and I think there are a couple of people from the motor vehicle industry on the call, on the webinar, but I imagine they are spending a lot of time zeroing in on the car and car parts rules of origins that are there and looking at their supply chains and see if they can in fact meet them. I think the answer is, probably at the moment, there is no way they can without changing their supply chains in some way. I think the only saving grace, as I mentioned, is the rule that looks at the sub-component level, so if they can build sub-components up using inputs that are non-originating and maybe some European union ones as well, because of the cumulation provisions they can start to build sub-components into components, etc, etc. So, it's possible but it's going to be an enormous amount of work and enormous amount of thinking how you would do that, not just for the car industry but for most manufacturing industries with long and complex supply chains, the rules of origins are relatively disastrous.

JP:  We are going to take some more questions. I know that some people need to drop over the next few minutes I am going to try and do the questions then people that will stay for the data and the DTO will stay naturally. Okay I think we are coming back to James, or Tim or myself on these ones. I am going to say them both together because they are linked on two different clients with the shortest question first. Jake, James Tim: "Politically, does the UK have any negotiating levers or positions of influence at all or are we now at the EU's mercy on financial services?" And the linked question: "From what you have seen, and considering the balance of negotiating power between the UK and the EU, do you see any medium-term reduction of London's global financial hub and the dominant city in Europe?".

JG:  I might go for that question as I have been asked that and I will come on to that. But I am going to ask James just to have a quick think about negotiating power. I think we touched upon it a little bit earlier. Medium-term reduction as London as a global financial hub: my instinct is still no. Long term potentially, but long term things might get better. Medium term: what I see is financial services becoming far more expensive but I think there are two reasons why medium term there won't be such a shift. One is language and the US, and who the US want to face in the first instance and, indeed, Asia. I think they will still want to have the UK quarterbacking. And the second is, and this is going to sound offensive but it's not meant to, but I think the European regulators in the European market infrastructure are five to ten years behind the UK in terms of understanding as to how certain products work and run, and until that is materially changed or tied up I can't see a huge run into Europe. I mean, the amount of people that were expected to be in Europe, if we have got 5% or 10% of the initial expectations, I would be surprised. I think that COVID isn’t going to drive that forward in the short- to mid-term either. So, I am relatively optimistic that London still quarterbacks Europe medium term; long term not so sure. Happy to take any objections from Tim or James and I suppose, James, you can just drive that one home, pardon the car pun and talk about that comment and influence for a second at the table.

TC:  I agree with everything you just said, Jake, really. All I will add on that, the thing I guess as everyone will know, in terms of headcount, the flow out of London so far has been really relatively small and even now, after people have been establishing banks and investment firms and insurance companies in the EU, particularly, obviously in investment, the great bulk really of capability and infrastructure in Europe remains in London. So, therefore I think we have said before that intuitively you would expect some European business in Euro [inaudible] obviously to flow to EU firms going forward rather than to London. The fact remains, I would agree with you: medium term it is hard to see that the influence of London will really diminish significantly. I don’t think it will. Longer term, obviously I guess the situation is difficult to prophesy. In terms of influence, I must admit I don’t think we are in a great place really. I think quite a lot actually will just depend on, there is one thing maybe we have not said about the trade agreement so far is potentially, even though it came in with great fanfare, it's potentially quite unstable. There are review clauses in it, and, certainly in theory, it can come to an end by giving of notice by either party, and even though trade agreements aren't the [inaudible] ever made they don't tend to get ended in that way. Nonetheless, there is the potential that this relationship may go well but, equally, the relationship may be unstable. Now, in the event of some instability, how that will quite play, out one doesn’t really know and even though, intuitively, one may say: "Okay, you say you would be unlikely to do anything to benefit the UK", one doesn’t quite know the way the cards will lie when that happens and quite how that type of instability would affect everything. But it's more likely that if things go well that the EU would look favourably on the things we have been talking about and if they didn’t, but nonetheless, as I say, you can't quite tell the way it would actually shake up.

JP:  Thank you. Apropos to everything, the lead story on Thomson Reuters's Regulatory Intelligence this morning, Andrew Bailey said it would "obviously be mad for the UK to commit itself to following the EU's financial services rules as the price for gaining equivalence." I think you can see this is going to be a little bit, rough. Okay, before we go on to Gita, one of our fellow partners who leads quite a lot of our Brexit work, Rob Aird, has tweeted or texted me to say "car prices in the UK and the EU will go up by 10%. Happy new year!". So, thanks for that Rob, just really helpful, constructive, good, positive mood music for the morning. Gita, I think we're going to do five minutes on data protection; we might rejoin you back in next Thursday where we are going to be looking at contractual issues, employment issues, data issues and a bit of an FS scrub. I know lots of people want to hear the key things they should be thinking about on data. So, if we can rush you through the key points then we might come back to that next week, if that’s okay.

GS:  No problem. Morning everybody so the first slide, James, is really just to lay out the UK data protection framework, in the UK. So, as of the 1st of January, the GDPR ceases to have direct effect in the UK, however it is preserved in UK law by virtue of the European Union [inaudible] until we have got this UK GDPR, which is really aligned to the government's and the Information Commissioner's Office's commitment to maintain an equivalent data protection regime in the UK. The UK GDPR then also the has the Data Protection Act 2018, which is subordinate to it, and that largely deals with permitted derogations under the GDPR and also law enforcement data processing and then the privacy in electronic communications regulation. What does that mean? Effectively, we now have two separate albeit almost parallel data protection regimes, one for the EU and one for the UK so organisations that are operating in both trading areas will need to be ready to manage their privacy compliance under both regimes. And so if we just go on to the next slide then.

I think the big question for a lot of our clients is : "Well, as the UK is now a third country what does that mean for flows of data between the EU and the UK" and so, before the TCA if there was a lot of uncertainty around what would happen in a no-deal scenario and also in the absence of adequacy in respect of the transfers of data from the EU to the UK. And so what the TCA does, however, is it gives us a bridging period of four to six weeks from the 1st of January effectively allowing time for the Commission to consider its adequacy assessment for the UK, within which organisations are able to continue to transfer data from Europe to the UK without applying any additional safeguards. As we know, transfers from the UK to the EU have been stated as not requiring any safeguards for the foreseeable future and within the Withdrawal Act, the states of the EEA have been given an adequacy status from the UK. So, the UK's entitlement to this continued bridging period is subject to several commitments and one of those commitments, which actually flows both ways, is that neither jurisdiction will adopt localisation requirements or require organisations to use globally certified or approved computing facilities and that condition is going to be kept under review for a period of three years.

There is also commitment to continue to protect individuals against unsolicited direct marketing and around the sharing of passenger information, vehicle registration information in the context of international law and cooperation in relation to criminal record information. So, there is still some collaboration in respect of those general data sharing provisions. What we have had from the ICO is a statement to confirm the interim period but what they have recommended is that organisations still consider putting in place data transfer mechanisms during this period of a sensible proportion and so, basically, adequacy is not guaranteed whilst the regimes do run in parallel. At the moment, I think there is still some caution to be had around whether we will get adequacy status and so organisations should really be considering their data transfer mechanisms and also their contractual measures to legitimise transfers of the data from the EEA to the UK. And I think, just to state, that obviously the interim period only applies to international transfers of data and not to the other obligations under the GDPR which now, with the UK being a third country, organisations would need to adhere to and that’s on the next slide but, Jake, I am not going to talk to that today.

JG:  Everyone will get the slides anyway and so we will hold the top 5 actions for next week. I think the short term answer is Data is slightly better placed that Financial Services at least in the interim.

GS:  Yes I think that’s right.

JG:  And good.

Tim, we will end with a bit of DTO what happened to ruin your New Year's Eve when you would have otherwise been out clubbing Shoreditch or something?

TC:  Thank you very much for that Jake. I can't quite remember the last time I went clubbing. I think it was probably over a decade ago. So, DTO. This is bit more a recondite topic from those which we have discussed. It affects who it affects and those people who will know about that. So, the derivatives trading obligations – the DTO – and that’s interest rate derivatives and certain other derivatives which have to, under the DTO, be traded on – if you are an EU firm – on an EU trading venue or a third country equivalent trading venue, meaning not the UK, leaving a conflict of law issue if you are, say, an EU firm with a UK branch, your branch then becomes subject to both the EU DTO and the UK DTO, leaving you with a quandary about how you satisfy it, because the UK DTO says: execute on a UK venue or third country equivalent, and your EU firm is under an obligation to carry out that derivative on an EU venue or third country equivalent.

So, before Christmas, what people's plans were, to some extent, we saw a lot of plans to shift this kind of trading on to US SEFs. So US trading venues being one of the beneficiaries of Brexit, in a way, in this small corner of the wider issue, because a UK investment firm and an EU investment firm could match up, say, an interest rate swap in scope of the DTO, on the US SEF because both jurisdictions recognised the SEF as a trading venue. That wasn’t, by any means, a comfortable position for most people; some people just couldn’t plug into a SEF, for some people they could but it was costly and for a host of other reasons. So, it wasn’t a good position to be in. And everyone was hoping and wishing that the regulators in the UK would come out and say: "Listen it's all okay. UK firms, including branches of EU firms, we – for whatever period of time – recognise EU trading venues and that means you don’t have to trade on SEF, it means EU counterparties can trade on one of the EU venues which trades these kind of derivatives and it's all going to be okay." We got to Christmas and none of the regulators had delivered that present. We got past Christmas and still no word of it, although there were rumours leading up to Christmas and we had expected to see something on this. We hadn’t expected to see it on the 31st of December and we hadn’t quite. It had been discussed, to be fair, in some of the trade associations like ISDA so we did expect some of the form it came in, but it’s a fairly limited relief by the FCA, so let's just quickly go through what the FCA has said.

The first headline is, that it does allow UK firms to trade on EU venues and satisfy their UK DTO, so that’s one headline. So, if you're a UK firm who is worried about these derivatives then, in some cases, you are now allowed to trade on those venues. So, let's take a case study. If you are a UK investment firm and you have, say, am EU client and you want to trade an interest rate swap, can you now trade that on one of the EU trading venues? Yes, if the following conditions are met: one UK firm has taken what the FCA says as a reasonable step to satisfy yourself that the client - that’s the EU client and that’s important, we will come back to that, the word client is important - cannot basically execute on a SEF, i.e. the clients you are dealing with – the EU client - has not taken steps, or has arrangements, to execute on SEF. There is some question about how high that bar is, i.e. satisfied the client does not have arrangements in place to execute the trade on a SEF, for example - I'm choosing SEF but it could be any one of the venues which the EU and UK have granted for the their country equivalence to - it sounds like quite a high bar. It's not simply that it would be costly for the client, it's that they haven’t got arrangements in place to execute that trade. So, a reasonably high bar there and I think people will probably take different views on the interpretation of that depending on the risk appetite.

The second limb is familiar for anyone who has looked at this from the share trading obligation angle. The UK firm, here, will have to satisfy itself that the EU venue where it is going to trade that derivative on, that can benefit from the overseas persons exemption or as a recognised overseas investment exchange. They are both UKisms and they can both be satisfied by an email to the trading venue saying: in your view are you either a recognised overseas investment exchange, of which there is an FCA list which you can look at, or, if not, do you benefit from the overseas persons exclusion or are you within the temporary permissions regime. So, it's worth either looking at the recognised overseas investment exchange list, which the FCA maintains, take the exchange from that, or to send an email, or to check the relevant trading venue's website because some of them I think now have website disclaimers saying they satisfy these requirements.

So, just coming back to the two last points. I said that this was limited and one of the reasons it is limited is that you have to check that client doesn’t have arrangements in place to execute the trade on SEF. The second is that this doesn’t seem intended, and is not intended, for trades between dealers, basically. The word "client" is important and the FCA go on to say that this relief does not apply to trades with - you can't fine non-EU clients, so it's not a fine - but are proprietary traded trades between dealers, so it has to be a client relationship and that was, we understand, discussed in certain trade associations and is thought workable, but it does seem to create a problem for, say, interbank derivative trading who don’t consider each other their clients, for example. So, a bit of a tangled relief there; it could have just been a bit more straightforward I think, but there we go. Why we had to enter into this kind of labyrinthian set of obligations for this perhaps some people will question, but here we are and there they are.

The second and last point is that this will be reviewed on the 31st of March of this year. Reviewed, not necessarily ceased, that we will see. The cynics amongst us might suggest that this date has some correlation to the EU and UK promise that they will create an MoU - Memorandum of Understanding – and whether it has any relationship to that timing; it may or may not do, to be frank and I am not sure the DTO relief gives the UK any particular leverage, because Europe seemed relatively happy with just maintaining its relatively hard line approach on anything, saying the DTO is what the DTO is. So, we will see but that is the FCA's relief giving firms a little bit of wriggle room on that for a brief period of time in relation to certain DTO trade flows. And with that I will pass back to Jake.

JG:  Thank you very much, Tim. I think we are going to leave it there. The jurisdictional updates, you will get the slides but, to be blunt: Cyprus, Italy, Luxembourg; there has been a bit of action there and a bit in Portugal; nothing materially to write home about. We are going to pick up quite a few of the questions that we didn’t get to next week. Next week we are going to do the same time we are going to talk a bit more about employment and contractual matters, we will do a bit of an FS mop-up and some developing themes. We have got a Reg breakfast, I think, Thursday after that.

Look, thanks to everyone for attending; we really appreciate it. We nearly had over 800 people on this webinar this morning, including some children, and I know that because one of our very good clients, James - I won't embarrass him with his surname – but he came back after my introduction to say that his home-schooling daughter obviously heard what I had to say about dinosaurs and advises that the spikes on a stegosaurus's tail are called thagomizers. So, I think we have at least all learnt one thing today which is spikes on a stegosaurus's tail are called thagomizers and that is by virtue of our kids who are home schooling. So nearly a thousand of you on and I am not quite sure how many of you are older than the legal age to drink, but I hope we have enjoyed this webinar at least. Thanks to Ross, thanks to James, thanks to Gita, thanks to Tim and we will do the same thing next Thursday and see what we're talking about then. So, good morning everyone and a happy New Year and that’s the last time I will say it. Take care, everyone.

JP:  Thank you very much.

GS:  Bye.