What’s on my mind for 2021

14 January 2021

Phil LloydManaging Director, Head of Customer Sales Delivery

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John Stevenson-HamiltonLIBOR Client Strategy & Engagement

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Other insights

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At the start of each year I set out things we're going to be watching out for. Last year naturally we didn't anticipate COVID, but despite that a lot of progress was still made across the regulatory space.   

LIBOR1, ESG2 and of course Brexit moved forward, CSDR3 was watered down by the UK possibly reflecting what's to come, while Margin for uncleared was put on ice. 

Sitting here at home with my crystal ball, I look to lay out what I think will feature in 2021…  


  • The final chapter is upon us and it’s going to be a busy year. As previously mentioned, we expect the announcement that LIBOR will end (locking in the X) early this year ahead of planned cessation early 2022 but before then we have a host of consultations and upcoming deadlines.
  • Coming up: 18 Jan: FCA Tough Legacy consultation deadline; 25 Jan: IBA11 consultation on which LIBOR rates should ‘end’ deadline; 25 Jan: ISDA Fallback Protocol effective; 29 Jan: LCH consultation on big bang switch. 
  • And of course, there are others outside the UK reform. Add in term rates going live, loan milestones, linear and non-linear milestones to stop new LIBOR business, it’s going to be a big final year. How cross currency swaps and multi-currency syndicated loans evolve with each major jurisdiction in a different position will keep all on their toes. 


  • As Andrew Bailey stated on 6 January, “Britain should abandon full access to EU financial markets if it means becoming a regulatory rule-taker”.  All eyes therefore on the end of March UK / EU MoU which is attempting to replicate the level of cooperation that existed between EU agencies and UK regulatory authorities when the UK was a member of the EU.
  • It is quite conceivable that even if divergence takes place, principles based MoUs may enable continued co-operation. UK regulatory authorities have already made it clear in the consultations on the Future Financial Framework that they prefer a principles based legislative approach rather than a rules based one. One to keep a sharp eye on throughout the year. 
  • FCA on 31 Dec 2020 announced they would allow a 3 month temporary relief from the UK DTO12 when executing orders or transacting with EU clients subject to the EU DTO (FCs13 and NFC+14).  UK firms (and EU firms otherwise subject to the UK DTO) can deal on an EU venue and the UK DTO will be dis-applied when the EU client and the UK firm do not have ‘arrangements’ in place to deal over a third country venue recognised as equivalent by both the EU and the UK (e.g. a SEF15), subject to certain additional conditions; worth looking at the EEA16 market operators market operators that have applied, and those that have already been accepted as 'ROIEs'17.


  • ESMA18 is undertaking an extensive consultation with the finance industry ("MiFID II Review") to assess the proportionality of the MIFID II directive and published a number of consultative papers last year, which will be followed by further ones in the first quarter of this year.
  • ESMA has also recognised the impact of coronavirus on financial services and has sought to alleviate the regulatory reporting burden by introducing some changes to the directive, dubbed the MiFID II ‘Quick Fix’, as soon as possible. From the perspective of UK-based firms, the ‘Quick Fix’ changes will probably be approved in the first quarter and it’s unclear whether the FCA will choose to adopt them or not.
  • As the ‘Quick fix’ changes are to the EU Directive not the regulation, they have to be adopted into country law requiring a 12-month implementation period. Key among the updates are the suspension of RTS19 27 reporting for 2 years and a revision to the unbundling rules for research in certain situations. Will the UK go further with these changes? 

Margin for uncleared

  • All eyes are now on 1 September 2021 for the implementation of IM Phase 5 (to be applied to smaller financial institutions with more than EUR 50 billion notional). There’s huge market attention on finding the legal and operational resources to prepare for these new margin requirements.
  • The key themes we're expecting to see raised during Phase 5 preparation: confirmation of entities in scope; repapering; threshold monitoring; a ‘tweaked’ SIMM20; and of course, an increase in demand for clearing. 


  • As the ESG agenda continues to drive forward at an incredible pace so does the focus and engagement from the wider market, regulators and even the new US President Elect. Focus is increasingly turning to creating a common language for disclosures aided by the EU drive for a standard taxonomy. A common sustainable finance taxonomy will allow increased asset flows through increased confidence, transparency, tracking and incentives. 
  • Key deliveries we should be looking out for in 2021 are the final RTS for the EU taxonomy regulation; final RTS for the EU Disclosure regulation; FCA disclosure rules in its rule book to allow firms to meet the first disclosure tranche in the joint task force delivery road map. Additionally, 10 March sustainability risk disclosure and adverse sustainability impact disclosure requirements. More to come on all this. 

Dodd Frank / EMIR21 changes

  • Following the publication of global derivatives reporting standards, regulatory authorities have worked on changing their reporting requirements to ensure the standards are adhered to. The CFTC22 approved amendments to Dodd Frank in September 2020 were published in The Federal Register at the end of November 2020. The implementation date is 18 months following this, so will be May 2022.
  • The final draft of the revised EU reporting rules was published on 17 December 2020, although the detailed technical specification has not yet been published. It seems likely that the final delegated legislation will be published in the EU Official Journal in Q2 2021. Again, there will be a 18-month implementation period, so it is likely the implementation will take place in the last quarter of 2022. Of course, while these revised regulations won’t go live until 2022, the lion’s share of the effort to modify reporting to meet the new requirements will have to take place in 2021.

Anything else?

  • We also expect the extended use of automation this year, supported particularly by buy side firms dispensing with low and high touch execution concepts and associated organisation in favour of use of appropriate automation to deliver cost & workflow efficiency. A coping mechanism for Brexit maybe seen through e-trading venues minimising high touch constraints. Additionally, increased geographical separation due to continued COVID impacts may accelerate workflow digitisation focus.   
So, this time last year we were talking about the right topics but COVID obviously put paid to some of the best laid plans. Let's just hope 2021 ends up having a more stable, dare we say boring, path noting the above points playing out. 

Stop the Press  

For some of our EU customers, going forward you will be receiving my publications from a new mailbox Regulatory Insights (NatWest Markets) so please watch out for it. This is to meet various Brexit requirements. 
And just in case you missed it --- at the end of November Moody's upgraded NatWest Markets two notches (to A3 from Baa2) and maintained the positive outlook on these ratings.  Take a look at our factbook for more details.
Wishing everyone a happy new year and we look forward to discussing more on the topics above with you as the year progresses.  
Phil Lloyd, NWM Sales  
John Stevenson-Hamilton, NWM LIBOR Client Engagement

That was the year that was - 2020  

I'm sure many are only too happy to leave 2020 behind, but as a reminder of the year we'd rather forget, please see below the links to all the articles we published throughout 2020 (most recent at the top):
That's all folks!
Please click here to find all of NatWest Markets’ Strategy and Sales commentary/ideas.
You can also find out more about our electronic offering and credentials for Rates here and for FX here.    




London Inter-Bank Offered Rate



Environmental, Social and Governance



Central Securities Depositories Regulation



International Swaps and Derivatives Association



Financial Conduct Authority



Intercontinental Exchange



Memorandum of Understanding



Markets in Financial Instruments Directive 2



Initial Margin



Euro Overnight Index Average



ICE Benchmark Administration Limited



Derivative Trading Obligation



Financial counterparties



Non-Financial counterparties



Swap Execution Facility



European Economic Area



Recognised Overseas Investment Exchange



European Securities and Markets Authority



Regulatory Technical Standards



Standard Initial Margin Model



European Market Infrastructure Regulation



Commodity Futures Trading Commission



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