Cyprus financial regulator CySEC, in apparent response to an increase in CIF license applications from FCA regulated firms, has issued a notice that any firm wishing to ensure its application has time to work its way through the system before a possible ‘Hard Brexit’ in March 2019 needs to have its paperwork completed and submitted to CySEC by the end of September.
ESMA issued a warning to licensed financial institutions both inside the UK and elsewhere in Europe that they should prepare themselves for the possibility of a Hard Brexit come March. As Brexit terms have not yet been agreed upon between UK and EU representative negotiators, it is certainly possible that in March – just seven months away – MiFID passport between the UK and EU will end. If so, any UK firm will need to either let go of its EU clients (and vice versa) or shift them to an EU subsidiary separately licensed somewhere in the EU.
The response, apparently, has been an increase in CIF license applications in Cyprus by UK-FCA firms – and an increase in the near-term workload at CySEC.
TIMELY SUBMISSION OF REQUESTS FOR AUTHORISATION FOLLOWING THE UNITED KINGDOM’S WITHDRAWAL FROM THE EUROPEAN UNION
The Cyprus Securities and Exchange Commission (“CySEC”) draws the attention of all Market Participants to the Public Statement issued by the European Securities and Markets Authority (“ESMA”), with reference n. ESMA 42-110-998, in relation to the timely submission of requests for authorization by entities wishing to relocate to another EU member state due to the United Kingdom withdrawing from the European Union.
ESMA has clarified that on 30 March 2019, firms must have a fully authorized legal entity located in the EU27 to continue providing services in the EU27. The scope of the Public Statement issued by ESMA is to raise the awareness of all market participants on the importance for early preparation given the fact that there is no assurance that a transition period will be implemented.
To facilitate the thorough application and examination process for new authorisations, entities wishing to relocate to the Republic of Cyprus, be authorised for regulated services and become operational by 30 March 2019, are advised to submit their applications to CySEC as soon as possible and no later than the end of September 2018, in order to allow their case to be reviewed.
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