The UK withdrew its membership from the EU (“Brexit”) with effect from 1:00am Cyprus time on 1 February 2020. A transition period is set to apply until 31 December 2020, in accordance with the terms of Withdrawal Agreement which was negotiated between the EU and UK.
Both ESMA and CySEC have issued announcements clarifying the position of UK entities which intend to provide financial services to the EU during the Brexit transition period. In summary, the announcements state that, between 1 February 2020 and 31 December 2020:
- EU law will continue to apply to the UK as if it were a Member State of the EU. Therefore, UK entities will continue to have the same rights and obligations as provided for under EU law. Thus, for example, they will continue to have passporting rights but, they will also retain reporting and notification obligations under MiFIDII / MiFIR, EMIR, CSDR, AIFMD, MMFR etc; and
- The UK and its representatives will, in general, no longer be permitted to participate in the EU institutions, agencies, or other bodies, or, in their governance or decision- making processes. UK participation will only be permitted in exceptional circumstances where it may be justified. Thus, for UK entities, the only significant change up to 31 December 2020 is that neither the UK, nor the FCA, will have any representation in competent EU bodies such as the EU Commission, the EU Parliament or ESMA’s Board of Supervisors.
For further information or assistance on this matter, please contact Dimitris Papoutsis or any member of our Financial Services team or your usual contact at Elias Neocleous & Co LLC.