We are aware that many of our clients have received or been alerted to communications issued by EU 27 member state regulators regarding planning for the UK’s exit from the EU without a deal (a so called ‘hard Brexit’). We wanted to bring to your attention specifically a set of communications issued by the Luxembourg regulator, the Commission de Surveillance du Secteur Financier (“CSSF”).
In short, Luxembourg has established a statutory regime that is broadly comparably to the UK’s Temporary Permission Regime. A transitional provision will be made to allow for contract continuity of existing relationships established and serviced via passporting rights under various EU directives, including Directive 2009/65/EC (“UCITS Directive”), Directive 2011/61/EU, (“AIFM Directive”), and Directive 2014//61/EU (“MIFID II”).
Successful application under this transitional regime will allow firms that currently use passporting rights to continue to service ‘existing contracts’ for a further 12 months, following the date of a hard Brexit.
In order to benefit from this provision, UK entities will need to prepare and submit the relevant ‘Brexit Notification forms’, now available through the CSSF’s eDesk portal. The deadline is for application is 15 September 2019.
There is a corresponding follow-on notice to the CSSF, required to be submitted by AIFMS and UCITS firms, to inform the CSSF of the steps intended to be undertaken to address the loss of passporting rights (i.e. application for authorisation in Luxembourg, or action taken otherwise).
We encourage firms to liaise with their EU based advisors to ensure that the firm and associated affiliates and funds take the necessary steps in preparing for a hard Brexit including by making the aforementioned application(s) to the CSSF, where the firm has a Luxembourg nexus.
The following are links to the CSSF press releases, together with a short form description of the type of firms and passports affected:
- Firms availing of a passport under the AIFMD or UCITS directives (i.e. UK AIFMs and UCITs firms, managing Luxembourg domiciled funds (under a managing passport) or marketing funds into Luxembourg (under a marketing passport)).
- Firms availing of a MiFID passport (e.g. UK investment manager or CAD Exempt Advisor – providing MiFID advisory services to a Luxembourg based client.)
- Follow on press release regarding the opening of the notification portal.
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