On 15 July 2019, the CSSF published two press releases in relation to mandatory notifications for (i) UK firms operating in Luxembourg and (ii) undertakings for collective investment and their managers in the context of Brexit.
The CSSF points out that, in the event of a hard Brexit, firms that are currently authorised in the UK under the Capital Requirements Directive (CRD), the Market in Financial Instruments Directive 2 (MiFID2), the Payment Services Directive 2 (PSD2) or the Electronic Money Directive (EMD) will be considered as “third country firms” from an EU perspective. As such, these firms lose the benefit of their existing passporting rights in the EU. Similar considerations are relevant for undertakings for collective investment and/or their managers currently authorised under the UCITS Directive and the AIFMD, which will be considered as “third-country entities” thereby also losing the benefit of their passporting rights in case of a hard Brexit.
While these UK firms and entities should already have taken the necessary steps to anticipate the consequences of a possible hard Brexit, the CSSF reminds UK market participants that if they intend to continue their business in Luxembourg and conclude new contracts, they are required to submit an application for authorisation by the CSSF as soon as possible, bearing in mind that the granting of an application can take up to 12 months.
With respect to existing activities, UK firms may take advantage, under certain conditions and subject to approval by the CSSF, of the transitional regime set forth under the Luxembourg Brexit laws of 8 April 2019. The CSSF has, in this respect, decided to set the transitional period at 12-months following the date of a hard Brexit. UK firms that are planning to continue serving existing contracts in Luxembourg under the transitional regime will be required to notify the CSSF – to such extent, the CSSF will set up a dedicated notification portal on the CSSF website in the coming weeks. The notifications must be made by 15 September 2019 at the latest.
Please note that the CSSF will assess each notification received and inform UK firms individually as to whether they can benefit or not from the transitional regime. For the purpose of the assessment, the CSSF will verify that the conditions of the Brexit laws are met, in particular, that a UK firm has duly passported its services to Luxembourg in the past and that the information on their activities is coherent and sufficiently detailed.
With regard to relevant UCIs and/or their managers, they are required to notify the CSSF of their intention to continue providing services in Luxembourg and file a notification by 15 September 2019 at the latest. The corresponding applications with all required supporting documents must be filed as soon as possible but, in any event, no later than by 31 October 2019.
The CSSF will communicate additional information in due course and will open its portal for notifications soon.