_As welcome as it was that the European Commission had reached agreement with the UK on the terms of the UK’s future trading relationship with the EU on Christmas Eve, until any determination is made on UK/EU equivalence, firms will have to rely on country-by-country financial services market access measures.
The CSSF wasted no time in addressing this, and it published Regulation N°20-09 on the same day, which amends Regulation N°20-02 of 29 June 2020, adding the UK to the list of third countries whose regulated firms are permitted to provide investment services or perform investment activities and provide ancillary services to per se professional clients and eligible counterparties for the purposes of Directive 2014/65/EU and Regulation (EU) No 600/2014 (MiFID II and MiFIR).
In order to benefit from this right to provide services without the need to establish a branch, third-country firms must be subject to supervision and authorisation rules that the CSSF deems equivalent to those laid down in the Law of 5 April 1993 on the Financial Sector; FCA regulation would be considered satisfactory for these purposes.
These provisions are enacted under the “national third country regime” and only apply to services provided on a cross-border basis from firms to clients in Luxembourg, with no onward passporting into the rest of the EU. As such, until there is a central equivalence decision from the European Commission, firms will have to rely on any measures in other member states on a jurisdiction-by-jurisdiction basis.
Notwithstanding the geographic limitation, the speed at which the CSSF pushed the button on the publication of these measures shows its commitment to the close relationship for financial services between Luxembourg and the UK.
Finally, in terms of the impact of Brexit and cross-border management and distribution of funds, your attention is drawn to the latest CSSF measures, which it detailed in its Press Release 20/26 of 7 December 2020.
If you are in any doubt as to your obligations around the provision of financial services in Luxembourg, or any other regulatory aspect of Brexit, then please do not hesitate to contact a member of our Banking & Finance Practice Group.