A declaration has been recently made by the European Securities and Markets Authority (ESMA) that a Public Statement might be made for increasing the awareness amongst the participants in the market regarding the high probability of no consensus being reached on the issue of United Kingdom leaving the European Union.
In other words, the ESMA plans to warn the market traders to prepare for the worst case scenario which is becoming more probable with every passing day. Since no transition period has yet been decided, the UK entities need to plan for a hard BREXIT that may take place on 30th March 2019.
It had earlier been reported that UK-EU MiFD passporting would stay valid till December 2020 even if a “Hard BREXIT” happens. However, the recent circulars and activities have indicated that it may not be the case and the validity of UK-EU MiFD passporting may end on 30th March 2019. If that becomes the case then the UK-FCA firms that are interested to provide services to EU clients may require a license from EU entities.
ESMA has particularly emphasized on the fact that the firms are willing to relocate to EU27 in order to keep providing services there must have a fully authorized entity from ESMA and NCAs (National Competent Authorities) by 30th March of next year if the UK withdraws from European Union on the said deadline.
With the increase in submission of an application for relocation, ESMA has urged the UK entities to submit their application for relocation as soon as possible so that their requests can be processed by 29th March 2019. Many NCAs have also informed the entities that if they fail to submit their application by the end of July this year, the NCAs cannot confirm whether they will receive the authorization by 29th March next year.
The entities have also been reminded by ESMA that the processing of the applications is a lengthy process and it depends completely on the accuracy as well as the quality of their application. Plus, the entities also need to contact the ESMA or respective NCAs regarding CRAs and TRs as soon as possible. In short, ESMA is inviting every UK entity that is looking forward to relocating in EU27 to complete the proceedings in order to be assured of the successful completion of the relocation process.