After the sunset:The impact of Brexit on EU market access for banks and investment firms Dr. Mathias Hanten, Dr. Osman Sacarcelik, 23 February 2018, Frankfurt am MainEBI Global Annual Conference on Banking Regulation
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• The decision of the UK to leave the EU and the withdrawal of the UK from the single market triggered specific legal and regulatory issues particularly for UK-based banks and investment firms.
• A major consequence of the Brexit will be a loss of the EU-passports for UK-based Institutions which are currently authorised to provide their services across the European Economic Area (“EEA”).
• The central question is whether and how UK-based institutions can continue to offer their cross-border services within the EU and the EEA without the EU-passport.
Introduction
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We were young…
• Second Banking Directive (89/646/EEC, 15 Dec. 1989)
Implementation: 01 Jan. 1993
• Investment Services Directive (93/22/EEC, 10 May 1993)
Implementation: 31 Dec. 1995
Please cast your minds back!
Majority of third-country providers opted for London as a European Hub.
UKFSI Subsidiary
Third CountryFSI
Parent
Branches
EEA Member State
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What are target structures?
EEA Member
State
EEA Subsidiary(FSI Corp EEA)
Third Country
FSIParent
FSI SubsidiaryUK
Branches
EU Passport Subsidiary Third-country Branch Cross-border
EEA Member
State
EEA Subsidiary(FSI Corp EEA)
Third Country
FSIParent
FSI SubsidiaryUK
Branches
EEA Member
State
Third Country
FSIParent
FSI SubsidiaryUK
EEA Subsidiary(FSI Corp
EEA)
EEA Member
State
Third Country
FSIParent
FSI SubsidiaryUK
EEA Subsidiary(FSI Corp
EEA)
EEA Member
State
Third Country
FSIParent
FSI SubsidiaryUK
EEA Member
State
Third Country
FSIParent
FSI SubsidiaryUK
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And?
Old wine in new bottles?
RELOCATION
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Are these topics new?
No, but...
… Brexit provides for a more focused perspective.
… law makers and regulators are expected to give clearer guidance.
… the more focused perspective crystallises regulators’
concerns, which are…
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Remaining concerns?
Double-hattingIs a double-hatting admissible?
Branching-backIs branching-back admissible?
OutsourcingTo what extent can sources be outsourced?
Reverse SolicitationTo what extent the reverse solicitation work?
Third-country Branches’ SupervisionHow would third country branches supervision look like?
ExemptionHow can an exemption work?
Investment Firms’ SupervisionHow would investment firms supervision look like?
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What’s the conclusion?
It‘s nothing new!
Missing guidance from regulators?
Is there a need for clearguidance?
SSM will be put to the test.
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