No-deal Brexit

National transitional reliefs

What happens if the UK leaves the EU without a deal? While there remains a lot of political uncertainty, question marks also arise at a more practical and operational level.

Will UK-based private equity fund managers continue to be able to manage funds established in the different EU Member States and/or to market EEA funds in those jurisdictions? If so, for how long and under what conditions?

To what extent will UK MiFID firms continue to be able to provide investment services to clients across the EU?

Similar questions can be asked in relation to EEA fund managers and their continued ability to rely on the AIFMD management and marketing passports and/or to use the MiFID services passport in the UK.

In cooperation with its Legal and Regulatory Committee, Invest Europe has prepared a country-by-country overview of the national transitional reliefs EU Member States have (or are about to) put in place to avoid any cliff edges in case of a no-deal Brexit. This exclusive guide aims to serve as a useful tool to help members navigate the myriad rules across the EU.

Austria

There are currently no indications of a transition period/temporary permission regime in Austria.

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Belgium

  • Will there be transitional relief on a no-deal Brexit?

Yes, to a limited extent.

  • What form will such relief take?

The Belgian legislator, the Belgian government and the Belgian financial supervision authorities are working on a package of Brexit measures. At present, the package consists of:

- a draft Brexit law, which was submitted to Parliament on 20 February and which, if adopted, will empower the government to take certain measures by Royal Decree. At the time of writing, the draft texts of the relevant Royal Decrees are not yet available; and

- a communication, which was issued on 22 February by the Belgian Financial Services and Markets Authority (FSMA).

  • Which types of activities will benefit?

Cross-border registration regime

Under Belgian law, third country firms can, subject to certain conditions (including reciprocal market access and equivalent supervision), apply for a cross-border registration to be authorised to provide investment services to MiFID “per se” professional clients and/or expatriates. The FSMA Communication confirms that the condition on reciprocity should be met in respect of the United Kingdom in light of the announcement by the UK government of a temporary permissions regime for inbound EEA firms. Moreover, the FSMA Communication states that it considers UK firms to be subject to equivalent supervision as long as the current supervisory regime for UK firms is maintained. Finally, the FSMA Communication helpfully provides that third country (e.g. UK) firms no longer need to go through a formal registration process with the FSMA. It is now sufficient to notify the FSMA by email, specifying the envisaged activity in Belgium and the targeted investor categories. This means that the process for UK firms to obtain a cross-border registration in Belgium should be fairly straightforward.

Contract continuity

The draft Brexit law empowers the government to take measures to safeguard the ongoing performance of pre-Brexit financial services contracts. This would be relevant for financial products (e.g. derivatives or contracts for investment advice/portfolio management) which, although entered into prior to Brexit, can subsequently be subject to “lifecycle events” implying the provision of a new service and, as such, triggering Belgian authorisation requirements. The measures which can be taken by the government could in particular consist of granting (a) the required authorisations to third country firms or (b) an equivalence determination. The government may also define which lifecycle events should be assimilated to the provision of a new investment service. There is, however, no visibility at this stage on the measures which the government will adopt in this respect.

  • For how long?

N/A

  • Will firms need to make a notification or application in order to benefit?

Yes, UK firms wishing (to continue) to provide investment services into Belgium following a no-deal Brexit must send a notification to the FSMA.

  • If so, by when must this be made?

Friday, 29 March 2019

  • Will any other conditions apply?

In order to obtain a cross-border registration, a UK firm must demonstrate that it also provides the relevant investment services in its home State.

In addition, we note that third country firms providing investment services in Belgium on a cross-border basis are required to comply with certain substantive legal and regulatory obligations (including Belgian COB rules).

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

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Bulgaria

  • Will there be transitional relief on a no-deal Brexit?

None at national level.

 

  • What form will such relief take?

None. No national measures are intended (in writing or otherwise).

The Bulgarian regulators will rely on any future FCA-ESMA MoUs (or similar EIOPA and EBA guidance for insurance and banking business) or recognition (likewise the three CCPs recognized by ESMA on 18 February 2019).

UK regulated entities will be treated from “day one” as regulated service providers from a third non-EEA country, with all consequences arising therefrom.

Informally these may be tolerated for a while, especially if they are able to demonstrate that the services are provided from their seat in the UK on an unsolicited cross-border basis.

  • Which types of activities will benefit?

Not yet known/unclear.

  • For how long?

Not yet known/unclear.

  • Will firms need to make a notification or application in order to benefit?

Not yet known/unclear.

  • If so, by when must this be made?

 [29 March]

  • Will any other conditions apply?

Not yet known/unclear.

A Bulgarian law regulatory authorization (license) will be required.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

The regulator will likely temporarily tolerate a status quo immediately after hard Brexit.

Thereafter, either a Bulgarian law authorization (license) or multilateral or bilateral recognition should be sought.

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Czech Republic

  • Will there be transitional relief on a no-deal Brexit?

No.

Although a specific Czech law governing the rights and status of UK nationals and certain other topics for an interim period until 2020 is currently being debated in the Czech Parliament, this does not specifically impact the AIFMD/MiFID areas.

  • What form will such relief take?

Not applicable.

However, despite the current lack of a specific relief law, initiatives such as the ESMA/FCA No-Deal Brexit MoU of February 2019 are monitored closely by the regulator and we cannot rule out local decrees or regulations designed to deal with a No-Deal Brexit for at least the immediate aftermath. Alternatively, the regulator may issue a position paper in which it will refrain from taking certain administrative action vis-à-vis passported UK entities – a comprehensive official regulator Q&A is expected in the following weeks.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in the Czech Republic?

No. The standard Czech third party regime provided in the Czech Investment Companies and Investment Funds Act (Act No 240/2013 Coll.) and its implementation decrees would apply, which may require the commissioning of equivalence analysis and other procedural steps.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds in the Czech Republic?

No (subject to the above).

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in the Czech Republic?

No (subject to the above).

  • For how long?

Not applicable.

  • Will firms need to make a notification or application in order to benefit?

Not applicable.

  • If so, by when must this be made?

Not applicable.

  • Will any other conditions apply?

No. As mentioned above, in case of a no-deal Brexit, UK Management Companies / Funds providing services based on notifications (passports/freedom of services principle) will be treated as third country entities under the Czech Investment Companies and Investment Funds Act.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

Past practice would suggest a measured and reasoned approach from the regulator in case of a no-deal Brexit, with detailed specific methodological guidance notes made available presumably in the coming weeks as noted above.

Given that UK-based funds make up a significant percentage of passported entities, the regulator is unlikely to resort to isolated hard-line Day 1 action of its own accord, instead coordinating with other regulators as a unified front and heeding any ESMA recommendations.

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Denmark

No information on transitional relief (if any) has been published yet, neither by the FSA nor on a legislative level. We have been informed that the Danish FSA has allocated resources to Brexit, but we are unaware if this will result in any transitional relief measures.

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Finland

  • Will there be transitional relief on a no-deal Brexit?

Yes (amendment of law pending).

  • What form will such relief take?

Specific Brexit Law

The Finnish Parliament has approved an amendment to the Finnish MiFID legislation, which is pending ratification by the President.

The Government Bill to the above amendment suggests that the Finnish Financial Supervisory Authority (the “FIN-FSA”) could give guidance on when an activity requires an authorisation or when an activity is considered merely as fulfilling pre-existing contractual obligations. So far, no public guidance by the FIN-FSA has been released. 

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in Finland?

Yes. Although this question has not been addressed expressly in the legislation, the Government Bill referred to above suggests that continuing to fulfil contractual obligations should not be considered as providing financial services requiring authorisation. This should apply by analogy to the management of funds (provided that such fund has been established and it has appointed a UK AIFM as its AIFM prior to Brexit).

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into Finland?

No. Such provisions have not been proposed (and such marketing would accordingly require a marketing notification under Article 42 of the AIFMD).

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in Finland?

Yes. However, the relevant provision allows only continuing to fulfil pre-existing contractual obligations. (Should a UK MiFID firm wish to provide financial services based on new contracts, this is allowed only if the firm applies for full MiFID authorisation from the FIN-FSA at the latest by the Brexit date, and during the transitional period (between the Brexit date and the date of granting the authorisation) providing such services is allowed only to professional clients.)

  • For how long?

For pre-existing contracts, there is no time limitation.

For new financial services, see above.

  • Will firms need to make a notification or application in order to benefit?

No, in respect of pre-existing contracts.

Yes, in respect of the full MiFID authorization (see above).

  • If so, by when must this be made?

By the Brexit date.

  • Will any other conditions apply?

No.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

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France

  • Will there be transitional relief on a no-deal Brexit?

Under the current state of the legislation (as at 25 February 2019), France has not introduced any temporary permission regime or transitional relief for the purposes of Brexit.

  • What form will such relief take?

Not applicable.

Please note, however, the publication of:

- the Law n°2019-30 of 19 January 2019, which allows the government to take legislative measures by ordinance in connection with the withdrawal of the UK from the EU in case no agreement has been reached; and
- the French Ordinance n°2019-75 of 6 February 2019 in respect of financial services.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in France?

No.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into France?

No, in addition and taking into account the definition of marketing in France (*), UK AIFs that are already on the market in France raise questions. [A specific notice could be issued to allow French investors to hold the units or shares concerned.]

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in France?

No. This means that a UK MiFID firm or a UK AIFM currently providing services in France through the passport and wishing to continue providing such services will need a local license, unless it is capable of relying upon an available exemption (e.g. the MiFID 2 reverse solicitation regime) or, for MiFID firms, upon the third country regime provided that an equivalence decision would be taken by the European Commission.

(*) In accordance with the AMF Position-Recommendation DOC 2014-04, “When units or shares of a UCITS or AIF have been marketed as defined above, those units or shares shall be considered as being marketed in France whenever investors among whom marketing in France was carried out are unit or shareholders in the said UCITS or AIFs.”

  • For how long?

Not applicable.

  • Will firms need to make a notification or application in order to benefit?

Not applicable.

  • If so, by when must this be made?

Not applicable. 

  • Will any other conditions apply?

Not applicable.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

Not at this stage, as far as is known.

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Germany

  • Will there be transitional relief on a no-deal Brexit?

Yes.

  • What form will such relief take?

Specific Brexit Law authorizing BaFin to adopt a temporary permission regime to UK MiFID firms.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in Germany?

No.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into Germany?

No, not under the Brexit law, but we understand from discussions with BaFin that they will take a “pragmatic approach” and permit AIFMs that have started negotiations with investors prior to Brexit date, to continue to do so thereafter. We also understand that BaFin is considering accepting NPPR applications prior to Brexit date.

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in Germany?

Yes but scope of temporary permission regime to be determined by BaFin (possible limitations), and only services which are closely linked to existing contracts are covered.

  • For how long?

21 months.

  • Will firms need to make a notification or application in order to benefit?

Unclear, subject to temporary permission regime determined by BaFin. It is likely that BaFin’s decision will take the form of a general ruling (Allgemeinverfügung).

  • If so, by when must this be made?

See above. This is not clear. It is likely that BaFin will issue a general ruling.

  • Will any other conditions apply?

Subject to the temporary permission regime, which will need to be implemented by BaFin.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

Yes, although not officially. See above.

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Hungary

  • Will there be transitional relief on a no-deal Brexit?

No. In case of a no-deal Brexit, UK Management Companies / Funds providing services based on notifications (passports/freedom of services principle) will be treated as third country entities.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in Hungary?

No.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds in Hungary?

No, unless the Hungarian third country regime requirements are met, for example cooperation arrangements for the purpose of systemic risk oversight between the Hungarian and the UK supervisory authorities (see Section 122 of the Hungarian Act Nr XVI of 2014 on Collective Investment Trusts and Their Managers - the Hungarian requirements are basically the requirements according to Article 42 of the AIFMD).

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in Hungary?

No.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

In case of a no-deal Brexit, all passports based on the freedom of services principle and/or other EU-based rights, issued for UK funds/management companies, will cease to exist.

There are 1,895 foreign investment firms and 55 AIFMD fund managers providing cross-border services registered in Hungary (https://intezmenykereso.mnb.hu/). Approximately 50% of them are from the UK.

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Ireland

  • Will there be transitional relief on a no-deal Brexit?

Yes.

  • What form will such relief take?

A. Primary Legislation

On 20 February 2019 the Irish government published a Bill (Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019) to accommodate a no-deal Brexit scenario dealing with a wide range of matters, including taxation and financial services. As regards financial services:

Under the CSD Regulation, Euronext Dublin (formerly the Irish Stock Exchange) would not have been able to continue using its current system (Ireland uses the UK-based CSD ‘Crest’) as the UK would become a third country. Part 7 of the Bill supports the European Commission’s temporary and conditional equivalence decision for UK-based Central Securities Depository (CSD) services and CCPs.

Part 7 also introduces measures to protect payments and transfers of securities made by Irish participants by empowering the Minister of Finance to ‘designate’ a ‘third country system’ for the purposes of the Settlement Finality Regulations. This will extend the protections of those Regulations to Irish firms using settlement or payments systems in a designated third country (UK).

Part 8 of the Bill provides for a temporary domestic run-off regime for the insurance industry, which, subject to a number of conditions, will enable certain insurance undertakings and intermediaries to continue to fulfil contractual obligations to their Irish customers for a period of three years after the date of the withdrawal of the UK.

It is expected that the Bill will become law comfortably in advance of 29 March.

B.  Regulatory Guidance on “location rule” for Irish Fund Management Companies

On 4 February 2019, the Central Bank of Ireland (CBI) published a “Notice of Intention” in relation to the existing location rule that a specified number of directors and designated persons of fund management companies domiciled in Ireland be resident in the EEA or such other country as the CBI may determine, taking into account criteria regarding effective supervision.

In the context of Brexit (on the basis of an agreed withdrawal agreement or otherwise), uncertainty had arisen as to whether the Central Bank will determine the UK as a country which meets this effective supervision requirement.

While the Notice of Intention is a little cryptic, it appears to amount to the CBI indicating that it will look to avoid a “cliff-edge” situation so that fund management companies will not be deemed non-compliant with the location rule in the event of a no-deal Brexit solely by virtue of having UK-based directors or designated persons.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in Ireland?

Yes. UK AIFMs can act as the designated AIFM to CBI-authorised Qualified Investor Investment Funds (QIAIFS) but not CBI-authorised retail investor funds (RIAIFS). There is no prohibition on third country AIFMs acting as the designated AIFM to non-CBI authorized AIFs.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into Ireland?

Yes, to MiFID professional investors only.

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in Ireland?

Yes. Under the existing “safe-harbour” provisions of Irish domestic MiFID legislation there is an exemption from the general requirement to be authorised under the Irish MiFID Regulations for any person whose registered or head office is outside the EU and who does not have a branch in Ireland and who provides investment services or perform investment activities (with or without any ancillary services) in Ireland exclusively to eligible counterparties or per-se professional clients (i.e. MiFID II Annex II Section I professional clients).

This safe harbour exemption can only be relied on by a third country firm if the following conditions are also met:

(a) the third country firm is subject to authorisation and supervision in the third country where it is established and the local competent authority of the third country pays due regard to FATF recommendations on AML/CTF (in practical terms, as long as the third country is i) not designated high risk or non-cooperative by FATF or ii) is a signatory to the IOSCO multilateral MOU (which the UK is), the third country will satisfy this condition), and

(b) co-operation arrangements that include provisions regulating the exchange of information for the purpose of preserving the integrity of the market and protecting investors are in place between the Central Bank of Ireland and the competent authorities where the third country firm is established (it is expected that the multilateral MOUs announced by ESMA and the FCA on 1 February will satisfy this condition in respect of the UK).

This exemption has existed since 3 January 2018 and is not Brexit related.

  • For how long?

See above.

  • Will firms need to make a notification or application in order to benefit?

No.

  • Will any other conditions apply?

See above.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

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Italy

  • Will there be transitional relief on a no-deal Brexit?

Yes.

  • What form will such relief take?

Specific Brexit Law announced by the Italian Ministry of Economy and Finance.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in Italy?

Yes.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into Italy?

Yes.

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in Italy?

Yes.

  • For how long?

The relief period will last until 31 December 2020. The relevant Decree Law is expected to be published imminently.

  • Will firms need to make a notification or application in order to benefit?

Information not available.

  • If so, by when must this be made?

Information not available.

  • Will any other conditions apply?

Information not available.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

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Luxembourg

  • Will there be transitional relief on a no-deal Brexit?

Yes.

  • What form will such relief take?

The Luxembourg government published on 31 January 2019, a proposal for a bill of law n° 7401 on measures to be taken in relation to the financial sector (the “Bill”) in case of a no-deal withdrawal of the UK and Northern Ireland from the EU (“Brexit”).

In this context, the Bill (1) notably grants both the Commission de Surveillance du Secteur Financier, the Luxembourg financial supervisory authority (“CSSF”), and the Commissariat aux Assurances, the Luxembourg authority in charge of the supervision of the insurance sector (“CAA”), with a series of powers to take temporary measures and (2) extends certain protective rules of the Settlement Finality Directive (Directive 98/26/EC) to third country systems.

It must be noted that the Bill is still in drafting phase and subject to comments and discussion between the government and stakeholders, as to its final form.

The Bill, when and if voted, shall amend the laws relating to (i) the financial sector, (ii) undertakings for collective investment, (iii) payment services, (iv) resolution, recovery and liquidation measures of credit institutions and some investment firms, (v) the insurance sector, and in particular (vi) the law of 12 July 2013 on alternative investment fund managers (“AIFM Law”), which implements the AIFMD.

  • Which types of activities will benefit?

The Bill covers the treatment granted to certain types of financial actors, further to Brexit in case of a no deal. The Bill gives the CSSF the power to continue to apply for a maximum period of 21 months as of 29 March 2019 (i.e. until the end of December 2020), the EU passporting provisions for the freedom to provide services and the freedom of establishment in favor of UK-based institutions (credit institutions, investment firms, payment institutions and electronic money institutions) when providing their services into Luxembourg. This derogatory regime is only available for (i) contracts concluded before 29 March 2019 and (ii) contracts concluded thereafter where they have a “close link” to contracts concluded before 29 March 2019. The interpretation of “close link” should read as in the preparatory work of the Bill, meaning “life-cycle events”, and is subject to further interpretation and clarification.

Management

With respect to alternative investment fund managers (“AIFM”), it is contemplated that UK AIFMs will be able to continue any investment management functions and other functions that an AIFM may perform in accordance with Annex I of the AIFMD, on a cross-border basis or through branches established in Luxembourg, if they comply with one of the two conditions set out above.

Delegation

Regardless of the Bill, delegation of the investment management/portfolio management or risk management functions to UK based AIFMs, will continue to be possible under the AIFM Law based on “third country” delegation rules.

Marketing

In relation to marketing, the interpretation of the Bill is still to be determined. Despite the uncertainty with respect to the applicability of the Bill and the transitional period to marketing, after the expiry of the transitional period it is certain that the rules applicable to non-EU AIFMs managing and marketing EU AIFs (based in Luxembourg or any other Member States) shall apply. UK AIFMs not benefiting from the Bill’s grandfathering provisions will be subject to the rules applicable to non-EU AIFMs managing and marketing EU AIFs as of the date of Brexit.

  • For how long?

21 months.

  • Will firms need to make a notification or application in order to benefit?

The Bill does not at this stage provide any details as to a notification requirement with respect to UK AIFMs already managing Luxembourg AIFs prior to Brexit, nor for UK AIFMs to be appointed post-Brexit on the basis of the “close link” exception.

It is yet to be confirmed whether and under what form any such notification to the CSSF would be made, and how it would be applied (to regulated AIFs only or generally to all AIFs).

  • If so, by when must this be made?

To be confirmed once the Bill has been passed.

  • Will any other conditions apply?

To be confirmed once the Bill has been passed.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No. However, the CSSF has actively engaged in the negotiation of the Bill and is responsive in relation to Brexit issues.

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Poland

There are currently no indications of a transition period/temporary permission regime in Poland. All governmental announcements are limited to general statements that as of 30 March 2019 the UK will be regarded as a non-EU country and thus all EU-related benefits (such as the four basic freedoms) will no longer be applicable towards the UK.

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Portugal

  • Will there be transitional relief on a no-deal Brexit?

Currently there are no details regarding a temporary permission or local regulations to be enacted. Further information is expected to be released by the Portuguese Banking, Securities and Insurance regulators and government. 

  • What form will such relief take?

It is not clear whether a transitional relief will apply on a no-deal Brexit nor if such relief will be in the form of a specific Brexit Law, formal guidance, both or other.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

As of this date, the Portuguese government has adopted the following measures:

21.02.2019: The Council of Ministries approved contingency measures for the scenario of a hard Brexit, which cover (i) support to UK nationals living in Portugal, (ii) a credit line to be provided to Portuguese companies that are exposed to Brexit, (iii) empowering of the online companies’ services to provide their support to UK companies wishing to have a presence (set-up/branch) in Portugal, (iv) a tourism campaign to be targeted to the UK, and (v) funds to be provided to Portuguese Foreign and Borders’ Services.

17.01.2019: The Portuguese government issued a paper on the preparation and contingency measures, under which it expresses its intention to ensure an orderly exit that does not harm commercial relations and business between the two countries. Nevertheless, the paper simply indicates that the Portuguese government will interact with the Portuguese regulators (Banking, Securities and Insurance regulators) in what concerns any local regulations.

In addition, the Portuguese regulators published the following information:

- The Bank of Portugal has an online Brexit FAQ section (available in Portuguese only, at https://www.bportugal.pt/page/perguntas-frequentes-brexit), under which it clarifies that, in case of a no-deal Brexit, UK companies shall be treated as third country firms. Further updates are expected to be published.

- The Portuguese Securities Market Commission (CMVM) has an online Brexit-related section on the authorisation in Portugal of UK Collective Investment Management Companies. CMVM and BoP have created a single contact point for those requests and clarifications and assured that a decision is taken within 3 months for authorisation by the Bank of Portugal, 3 months for registration and 30 days for registration with CMVM. Information on this proceeding may be found in English at: https://www.cmvm.pt/pt/SDI/DossierDeRegisto/InvestimentoColectivo/welc_manco/Pages/welcoming_manco.aspx

- The Portuguese Insurance Regulator (ASF) issued a circular raising the need for disclosure of information to insurance customers about the impact of the withdrawal of the UK from the EU. Specifically, the ASF urged the insurance companies and insurance brokers headquartered in the UK and with activity in Portugal to provide adequate information to insurance takers, insured persons and insurance beneficiaries (irrespectively of the case where there is a new contract or an existing one) on Brexit impact.

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Romania

There are currently no indications of a transition period/temporary permission regime in Romania.

The AIFMD has been transposed into Romanian Legislation through Law No. 74/2015 on managers of alternative investment funds (AIFMs) (“Law No. 74/2015”). The above-mentioned law stipulates specific rules in relation to third parties that are based on Article 42 AIFMD. In case of a no-deal Brexit, UK investment firms will be subject to the third country regime that is based on Article 42 AIFMD.

There are 54 AIFMs registered in Romania (https://asfromania.ro/supraveghere/registre-electronice/registrul-instrumentelor-si-investitiilor-financiare). 32 of them are from the UK.

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Slovakia

There are currently no indications of a transition period/temporary permission regime in Slovakia.

In case of a no-deal Brexit, UK management companies/funds providing services in the Slovak Republic based on notifications (passports/freedom of services principle) will be treated as third country entities. Article 42 of AIFMD was not implemented in the Slovak Republic.

There are 1,891 foreign securities traders registered in the Slovak Republic (https://subjekty.nbs.sk), which are providing their services based on the freedom of services principle. Approximately 80% of them are from the UK.

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Spain

  • Will there be transitional relief on a no-deal Brexit?

Yes, as per Royal Decree-Law 5/2019 (Real Decreto-ley 5/2019).

  • What form will such relief take?

Specific Brexit Law.

  • Which types of activities will benefit?

Provisions on financial activities include:

- Financial services contracts signed prior to the exit of the United Kingdom from the European Union will remain in force.

- After the exit of the United Kingdom from the European Union these entities must adapt to the third country regimes applicable under Spanish legislation. In order not to interfere in the management of old contracts, these may be extended while processing the request for a new one and maximum for a period of nine months after the exit. This temporary extension will only be applicable to contracts signed prior to the date of exit of the United Kingdom, but will not cover new activities.

- Entities shall obtain a new authorization under the third country regime in order to renew agreements entered into prior to the exit of the United Kingdom from the EU and to adapt essential rights and obligations of the parties in Spain to said agreements to the applicable regime.

- The competent Spanish authorities will supervise this activity and may take all the necessary measures to guarantee legal security and safeguard the interests of users of financial services.

  • For how long?

Maximum period of nine months from the exit of the UK from the EU.

  • Will firms need to make a notification or application in order to benefit?

Yes. Financial entities will have to obtain approval from the corresponding Spanish authority (Banco de España; Comisión Nacional del Mercado de Valores; Dirección General de Seguros y Fondos de Pensiones) in order to benefit from the applicable regime.

  • If so, by when must this be made?

Not specified.

  • Will any other conditions apply?

No.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

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Sweden

  • Will there be transitional relief on a no-deal Brexit?

Yes, likely in relation to MiFID firms. A bill has been proposed and is awaiting decision in parliament.

  • What form will such relief take?

Specific Brexit Provision to be added to the Swedish Securities Market Act (implementing MiFID 2), coupled with detailed implementing regulations from the Swedish Financial Supervisory Authority (the “SFSA”). The proposed bill only covers MiFID firms.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in Sweden?

Not yet known/unclear.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into Sweden?

Not yet known/unclear.

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in Sweden?

Yes, likely.

  • For how long?

Until 31 December 2021. Concretely:

The authority granted to the Government, or to the Government authority appointed by the Government, to issue regulations, should be in force for a limited time only. In section 5 it is proposed that such authority shall expire at the end of 2021.

  • Will firms need to make a notification or application in order to benefit?

Not yet known.

  • If so, by when must this be made?

Not applicable.

  • Will any other conditions apply?

Yes.

The bill proposes that the SFSA shall be authorised to adopt implementing regulations under which the scope of the transitional relief will be further specified.

It should be noted that while the current wording of the proposed transitional relief is very wide in its scope, it appears that the primary intention of the bill is to provide transitional relief with regard to existing derivative contracts. The Government has instructed the SFSA to decide on the final scope of the transitional relief and it is thus unknown whether the relief will encompass all investment services or will ultimately have a more limited scope.

Moreover, it is not yet clear whether the bill will be passed by parliament. As of 25 February 2019, it is planned that the parliament will vote on the bill on 13 March 2019 and that the suggested amendment to the law comes into force on 29 March 2019.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No indications.

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The Netherlands

  • Will there be transitional relief on a no-deal Brexit?

Yes.

  • What form will such relief take?

Specific Brexit Law, i.e. an amendment of the Exemption Regulation allowing UK investment firms to provide MiFID investment services in the Netherlands to professional investors and eligible counterparties.

In respect of AIFs, the regular Dutch third country regime will apply that is based on Article 42 AIFMD.

  • Which types of activities will benefit?

AIFMD management passport – Will UK AIFMs continue to be able to manage funds established in the Netherlands?

No.

AIFMD marketing passport – Will UK AIFMs continue to be able to market EEA funds into the Netherlands?

No, unless the Dutch third country regime requirements are met.

MiFID services passport – Will UK MiFID firms continue to be able to provide investment services to clients in the Netherlands?

Yes, but only to professional investors and eligible counterparties.

  • For how long?

The exemption for MiFID investment services will apply for a maximum period of 2 years from the date to be set by the Dutch Minister of Finance (probably Brexit date) but is anticipated to end on 1 January 2021.

Will firms need to make a notification or application in order to benefit?

Yes, a standard form is available here

  • If so, by when must this be made?

Notification should be made prior to Brexit.

  • Will any other conditions apply?

Yes, a fee of EUR 4,400 will be charged and specific MiFID II rules will apply to the provision of the investment services.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

No.

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United Kingdom

  • Will there be transitional relief on a no-deal Brexit?

Yes.

  • What form will such relief take?

The UK’s Financial Conduct Authority has established a temporary permissions regime that will allow EEA firms and funds currently passporting into the UK to continue as before in the event of a hard Brexit.

Further details are available here: https://www.fca.org.uk/brexit/temporary-permissions-regime.

  • Which types of activities will benefit?

AIFMD management passport

EEA AIFMs will continue to be able to manage funds established in the UK.

AIFMD marketing passport

EEA AIFMs will continue to be able to market EEA funds into the UK.

MiFID services passport

EEA MiFID firms will continue to be able to provide investment services to clients in the UK.

  • For how long?

Up to three years.

  • Will firms need to make a notification or application in order to benefit?

Yes.

  • If so, by when must this be made?

28 March 2019.

  • Will any other conditions apply?

Yes.

Firms benefitting from this regime will be allocated a specific period (or “landing slot”) during the three-year period, during which they must apply for full authorisation in the UK in order to continue.

  • Has the regulator given any formal or informal indication that there will be regulatory forbearance for firms immediately after Brexit day?

The FCA has been granted a Temporary Transitional Power that will allow it to delay or phase in changes to regulation for up to two years after Brexit. The FCA intends to use this power to ensure that firms can generally continue to comply with their regulatory obligations as they did before exit. This is intended to enable firms to adjust to post-exit requirements in an orderly way.

Further details are available here: https://www.fca.org.uk/news/press-releases/financial-conduct-authority-outlines-how-it-would-use-temporary-transitional-power.

 

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