Luxembourg’s reminder about regulated activities in the event of a no-deal Brexit
The Commission de Surveillance due Secteur Financier (“CSSF”) has issued a reminder about conducting regulated activities within Luxembourg in the…
The Commission de Surveillance due Secteur Financier (“CSSF”) has issued a reminder about conducting regulated activities within Luxembourg in the event that a deal is not reached between the EU and UK prior to 31 October 2019. Those firms who are authorised to provide regulated activities under CRD, MiFID II, PSD2 or EMD will lose the right to continue providing their services via the passporting regime and will be deemed to be “third country firms” under a no-deal Brexit. The CSSF have stressed that the provision of regulated activities in such circumstances without proper authorisation is illegal.
However, all may not be lost. The guidance issued by CSSF makes provision for existing contracts and possibly new contracts.
For those existing contracts, the CSSF has discretion to permit UK firms currently providing financial services in Luxembourg to continue to do so under the transitional regime for a period of 12 months. Such contracts will need to have been entered into prior to Brexit (31 October 2019). This will also capture contracts concluded post Brexit with close links to existing contracts. UK firms are required to notify the CSSF through the notification portal (shortly to open) of any such contracts prior to 15 September 2019. The CSSF will then determine, on an individual basis, whether the UK firm can receive the benefit of the transitional period.
For new contracts entered in Luxembourg post a no-deal Brexit, UK firms are required to submit an authorisation application to the CSSF as soon as possible. Such applications can take up to 12 months to be determined an in the absence of such authorisation or pending applications, UK firms to have no option but to cease all business on the day of a no-deal Brexit.
Contingency plan, contingency plan, contingency plan!