The Monticello team attended a webinar on Brexit and EMIR 2.2 last week regarding the changing nature of cross-border market access and supervision. The webinar was hosted by the UK Futures Industry Association (FIA) and featured a panel consisting of legal and clearing experts. With Brexit now a reality, EU regulators need to determine how to treat the major UK central counterparties (CCP) after the transition period ends on 12/31/2020. EU regulated financial institutions have large exposure concentrations to UK CCPs, such as the London Clearing House (LCH), ICE Clear Europe and the London Metal Exchange's (LME) clearing subsidiary. Under EMIR 2.2 rules, the UK CCPs would be classified as 3rd country entities, which would trigger punitive capital requirements that would force EU counterparties to either set up UK subsidiaries, or move their exposures to EU domiciled CCPs. The next few months will be pivotal to avoid this 'cliff edge' situation. Like seemingly everything related to Brexit, there will be twists and turns and it remains to be seen if an agreement can be reached between the EU and UK negotiators that will provide UK CCPs with temporary or permanent exemptions from EMIR 2.2 restrictions.