Brexit : Delegation And UK Temporary Regimes

On 25 January 2019, the CSSF published a Press Release 19/05 on the delegation of investment management/portfolio management and/or risk management activities to undertakings in the United Kingdom ("UK") and the temporary permissions regime in the UK.

Delegation of management activities to undertakings in the UK

In its press release, the CSSF confirms that it will endeavour to have the required cooperation between the Financial Conduct Authority ("FCA") and the CSSF in place on 29 March 2019 in the event of a "no-deal" Brexit. On this basis, the delegation of investment management/portfolio management and/or risk management to UK undertakings will continue to be possible without any disruption post-Brexit, provided that the UK undertaking continues to fulfil all applicable delegation requirements.

On 1 February 2019, ESMA issued a press release announcing that ESMA and EU securities regulators have agreed "no-deal Brexit Memoranda of Understanding ("MoUs")" with the FCA and reinforcing the CSSF's position.

In particular, ESMA announced that a multilateral MoU has been adopted between the EU securities regulators and the FCA covering supervisory cooperation, enforcement and information exchange between individual regulators and the FCA, which will allow them to share information relating to, amongst other things, market surveillance, investment services and asset management activities. This allows certain activities, such as fund manager outsourcing and delegation, to continue to be carried out by UK-based entities on behalf of counterparties based in the EEA.

The MoUs form part of the preparations should the UK leave the EU without a withdrawal agreement and will only take effect in the event of a no-deal Brexit scenario. The MoUs are similar to those already concluded on the exchange of information with many third-country supervisory authorities.

Operating and marketing in the UK by firms and investment funds established in Luxembourg

The CSSF indicates that a temporary permissions regime ("TPR") has been operating in the UK since 7 January 2019 for firms and investment funds passporting activities into the UK. Luxembourg firms and investment funds that have notified the FCA under the TPR will be authorised to continue new and existing regulated business within the scope of...