UK fund providers will have until 15 September 2019 to submit a ‘Brexit licence’ to the Luxembourg regulator to continue trading in the Grand Duchy.
The Commission de Surveillance du Secteur Financier (CSSF) is warning that unless firms submit a notification to them by that date, they will be considered as ‘third-country entities’. This would result in a loss of passporting rights and sanctions, should they continue to pursue regulated activities in Luxembourg following a no-deal Brexit.
All UK firms authorised under The Capital Requirements Directive (CRD), Markets in Financial Instruments Directive (MiFID II), Payment Services Directive (PSD2), or the e-money directive (EMD), along with Undertakings for Collective Investment (UCIs) established in the UK under the UCITS Directive and/or the Alternative Investment Fund Managers Directive (AIFM) will be required to notify the CSSF.
Following the 15 September deadline, firms authorised under both UCITS and AIFM will then have until 31 October 2019 to submit to the CSSF either the corresponding application for authorisation, the corresponding notification or information or any action taken otherwise on the nature of the activities they intend to pursue after the occurrence of a no deal Brexit, or the steps they have undertaken to address the loss of passporting rights.
For those firms currently authorised under CRD, MiFID II, PSD2 or EMD, provided their notifications are received by 15 September, the CSSF will assess each notification and assess whether the conditions of the Brexit laws are met and that the information on their activities is sufficiently detailed.
Martin Neason, Director at FE Global Funds Registration, says: “The CSSF introduced the Brexit laws in April this year, which were designed to introduce a degree of certainty for both investors and fund providers and their managers in the event of a ‘no-deal’ Brexit. This introduced a 12-month transitional period to allow those funds with operations in Luxembourg to meet the relevant criteria in the changing regulatory environment.
“However, while the transitional period is to be welcomed, this doesn’t mean that fund providers can adopt a ‘hands-off’ approach and continue to operate with a business as usual mentality. The CSSF expects that UK firms will have already taken the necessary steps to prepare and anticipate the consequences of the post-Brexit world. Firms who are likely to be impacted by these deadlines should seek specialist advice where necessary to ensure they avoid the penalties that will undoubtedly follow.”
