More pressure has been piled up on financial services companies that are willing to relocate and/or consider obtaining additional licenses in the European Union as Brexit approaches. The European Securities and Markets Authority (ESMA) has earlier today published a Public Statement stressing that market participants need to prepare for the so-called “hard Brexit”.
In particular, ESMA stresses that regulated entities wishing to relocate have to submit the respective requests for authorisation to the National Competent Authorities (NCAs) and ESMA in a timely manner. On March 30, 2019, firms must have a fully authorised legal entity located in the EU27 to continue providing services in the EU27.
ESMA says it has marked a rise in the number of authorisation requests submitted to EU27 authorities. Given these factors, ESMA urges entities wishing to relocate to the EU27 to submit their application for authorisation as soon as possible to allow it to be processed before March 29, 2019. Unless an application is received in the month of June/July, there is no guarantee that authorisation will be achievable before March 29, 2019. Putting it otherwise, time is running out to file the necessary applications.
As the UK plays a prominent role in the EU Single Market, the relocation of entities, activities and functions following the UK’s decision to withdraw requires a common effort at EU level to ensure a consistent supervisory approach to safeguard investor protection, the orderly functioning of financial markets and financial stability.
For that matter, a Supervisory Coordination Network (SCN) was established in May 2017 in order to provide a forum for reporting and discussions among NCAs regarding market participants seeking to relocate entities, activities or functions to the EU27. The goal of the SCN is to promote consistency of approach and decision-making by NCAs. In the scope of the SCN, NCAs discuss relocation cases on an anonymous basis.
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