The deadline is fast approaching for UK investment firms to submit a ‘Brexit licence’ to Luxembourg’s funds industry regulator so they can continue trading in the jurisdiction after a hard Brexit.
The Grand Duchy’s Commission de Surveillance de Secteur Financier (CSSF) has previously warned that unless companies submit a notification by September 15, they would be considered as ‘third-country entities’.
This would result in UK fund firms losing passporting rights and receiving sanctions if they continued activities in Luxembourg following a no-deal Brexit, the CSSF said.
Although UK MPs voted in favour of taking control of Parliament in a bid to prevent a no-deal scenario, it is still not set in stone whether the UK will crash out of the EU or not.
The regulator introduced the Brexit laws earlier this year in order to introduce a degree of certainty for investors and fund providers in the event of a no-deal taking place.
This gave a 12-month transitional period to allow funds operating in Luxembourg to meet the relevant criteria in the changing regulatory environment.
According to Martin Neason, director at Financial Express Global Funds Registration, this doesn’t mean fund providers can adopt a “hands-off” approach and continue to operate as per usual.
“The CSSF expects that UK firms will have already taken the necessary steps to prepare and anticipate the consequences of the post-Brexit world,” he said.
“Firms who are likely to be impacted by these deadlines should seek specialist advice where necessary to ensure they avoid the penalties that will undoubtedly follow.”
Following the September 15 deadline, companies authorised under both Ucits and alternative investment fund managers (AIFM) have until October 31 to submit their application for authorisation, information, or action taken on how they plan to continue in the event of a no deal Brexit.
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