Brexit: Update

Following the approval in March 2018 of the Draft Agreement on the UK’s withdrawal from the EU (see our Newsletter April 2018), including arrangements on a transition period to run until 31 December 2020, the UK Government adopted a White Paper on 12 July 2018, setting out its proposals for Brexit and containing a blueprint of its view on the future relationship with the EU.

In the White Paper, the UK Government proposed an economic partnership to the EU comprising, inter alia, a new free trade area for goods. On financial services, the White Paper included a proposal to conclude a bilateral framework of treaty-based commitments respecting the regulatory autonomy of both parties and including an expansive equivalence regime. The White Paper also envisaged the possibility for the UK to establish an independent trade policy with the rest of the world and set out principles for a future security partnership as well as institutional arrangements for the future relationship, including the recognition of the European Court of Justice as ultimate arbiter of EU law.

In view of the deadline of 29 March 2019, EU and Member State authorities have urged economic players and citizens to prepare for the possibility of the absence of an agreement on withdrawal being reached in time and the UK leaving the EU on 30 March 2019 without a transition period:

• On 25 June 2018, the European Banking Authority published an Opinion relating to the risks posed by the lack of preparation by financial institutions for the departure of the UK from the EU; 
• On 12 July 2018, the European Securities and Markets Authority (“ESMA”) issued a Public Statement emphasising the importance of making timely requests for authorisation to National Competent Authorities and ESMA for regulated entities wishing to relocate in the context of Brexit;
• On 19 July 2018, the European Commission adopted a Communication calling upon Member States, regional entities, economic players and private citizens to step up preparations to minimise the impact of a possible withdrawal, including sectoral illustrations of preparedness challenges and actions;
• On 25 July 2018, the CSSF issued Press Release 18/25. Referring also to ESMA’s publication mentioned above, the CSSF reminded investment fund managers (alternative investment fund managers or UCITS fund managers) wishing to relocate business to Luxembourg in the context of Brexit that the time required for analysing authorisation requests can be substantial and depends on numerous factors and urged them to submit their applications to the CSSF as soon as possible.