The FCA will grant firms who have signed up to the contingency plan a grace period to seek authorisation post-Brexit.
At the fourth United Kingdom Financial Sevices Brexit Summit, Nausicaa Delfas, Executive Director of International at the Financial Conduct Authority (FCA) revealed that more than 1,000 European Union (EU) firms and fund managers have entered the Temporary Permissions Regime.
The more than 1,000 firms and fund managers represent many more thousands of funds, Delfas stated, with the deadline for notifications to be submitted just one week away on the 28th of March, 2019.
As Finance Magnates previously reported should a so-called “hard Brexit” occur, that is, the United Kingdom exits the EU without a grace period in place, the temporary permissions regime allows firms within the European Economic Area (EEA) that are currently passporting in the UK to continue to do so for a limited period while they seek full FCA authorisation.
Passporting is when an EEA-registered firm exercises its right to do business in other EEA countries without needing further authorisation in each country. This has allowed UK brokerages and other financial institutions to operate within the EU and vice versa without needing additional authorisations.
Once the notification window closes, the British regulator will let the relevant firms know when they will need to submit their application for authorisation, otherwise referred to as their “landing slots”.
Nausicaa Delfas of FCA
“We will ensure that firms and funds have enough time to prepare their applications. We expect the first landing slots to be October to December 2019 and the last to be January to March 2021,” Delfas said.
No Such Deal for UK Firms in EU, FCA Warns
It is important to note that there is not a similar deal set up for UK firms who passport into the EU, however, there are some arrangements in place in Germany, Spain, France, Ireland, Italy, Luxembourg and the Netherlands.
As the European Securities and Markets Authority (ESMA) has previously highlighted, if financial institutions want to continue to operate within the EU following Brexit, then they will need to have separate operations in the union and the relevant financial licence.
Today, the FCA also spoke about its other preparations for Brexit, residual risks and what its outlook is post-Brexit.
