ESMA urges firms to prepare for Brexit transition period end
On January 1, 2021, once the UK’s transition period ends, financial market participants whose activity might be impacted should have fully implemented their preparatory measures.
The European Securities and Markets Authority (ESMA) today advised financial market participants to finalise preparations and implement suitable contingency plans in advance of the end of the United Kingdom’s transition period on December 31, 2020. ESMA also confirms that previously agreed Memoranda of Understandings (MoUs) on cooperation and information exchange concluded with the UK’s Financial Conduct Authority (FCA) remain valid and will come into effect at the end of the transition period.
On January 1, 2021, once the UK’s transition period ends, financial market participants whose activity might be impacted should have fully implemented their preparatory measures to mitigate any risks stemming from the end of the transition period. All entities should also have provided appropriate information to their clients on any resulting consequences, ESMA says.
On 1 February 2019, ESMA and EU national securities regulators announced the agreement of MoUs with the UK’s FCA to cover cooperation and exchange of information in the event the UK left the EU without a withdrawal agreement. At midnight (CET) on 31 January 2020, as the Withdrawal Agreement took effect and the UK entered into a transition period, whereby EU law continues to apply in and to the UK, these MoUs were not required to take effect.
ESMA, EU national securities regulators, and the FCA confirm that these MoUs, agreed in 2019, remain relevant and appropriate to ensure continued good cooperation and exchange of information and will come into effect at the end of the transition period, which is set to expire on 31 December 2020.
The FCA has introduced arrangements for temporary permission that will allow EEA firms to continue providing services and EEA funds to continue to be marketed in the UK once passporting ends, provided that the relevant notifications are made. Over 1,000 firms and over 600 fund managers have already notified the FCA.
Earlier in July, the UK Financial Conduct Authority (FCA) indicated that it will reopen the notification window on 30 September. From 2021, these EEA firms will be called to apply for permanent authorisation to replace their temporary permission.